18th Jul 2007 07:01
Rift Oil PLC18 July 2007 For immediate release 18 July 2007 Rift Oil Plc ("Rift" or the "Company") Placing of up to 293,333,333 New Ordinary Shares at an issue price of 3.75p each Rift Oil PLC (AIM : RIFT), the oil and gas exploration company with assets inPapua New Guinea, is pleased to announce a proposed placing to raise £11m. The Proposed Placing • Raising £11m (before expenses) • Placing of up to 293,333,333 New Ordinary Shares at 3.75p per share • The funds raised will be used to seek to prove up reserves within PPL 235 to increase the prospect of commercialising this discovery Background to the Placing • Rift, founded in November 2004, to acquire interests in oil and gas exploration licences in Papua New Guinea, floated on AIM in April 2006 • In March 2007 Rift signed a Memorandum of Understanding ("MOU") with Alcan South Pacific ("ASP"). The MOU sets out the activity to further investigate the supply of approximately 800 BCF of natural gas over 20 years to ASP's Gove Refinery in the Northern Territory of Australia. • This work programme is expected to be completed by mid 2008 and aims to provide sufficient information for the parties to proceed to a binding agreement to supply natural gas to Gove. • Two wells have been drilled on PPL 235 - both have found gas • Report dated 18 July 2007 estimates an average total resource potential of 798 BCF on prospects. Nominated Adviser and Broker to Rift is RBC Capital Markets Ian Gowrie-Smith, Chairman of Rift, commented : "To date, the Board has been exceptionally encouraged by the progress we havemade especially since our flotation on AIM in April 2006. Rift has experiencedsuccess with test drilling on the prospects with significant potential reserves.These funds will enable us to confirm the likelihood of sufficient gas reservesto the Gove Refinery under the terms of the MOU signed in March with Alcan SouthPacific and take us closer to the commercialisation of these exciting prospects." Peter Mikkelsen FGS, AAPG, as the qualified non-executive Director has reviewedthis statement and authorised its release. For further information please contact: Rift Oil PLC 020 7340 9970David Lees, Finance Director RBC Capital Markets 020 7653 4804Andrew SmithMartin Eales Buchanan CommunicationsTim Anderson 020 7466 5000Isabel Podda PLACING STATISTICS Pre Consolidation Issue Price 3.75p per Placing ShareMaximum number of Placing Shares proposed to be issued 293,333,333pursuant to the PlacingTotal number of Ordinary Shares in issue immediately 697,445,332following Admission(1)Approximate market capitalisation of the Company at the £26,154,200Issue Price following the issue of the Placing Shares(1)Approximate percentage of the Enlarged Share Capital 42.06%represented by the Placing Shares(1)Net proceeds from the issue of the Placing Shares(1) £10,400,000 (1) Assuming all the Placing Shares are subscribed EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2007Latest time and date for receipt of Forms of Proxy 11.10 a.m., 14 AugustExtraordinary General Meeting 11.10 a.m., 16 AugustCREST accounts credited with Placing Shares 17 AugustFirst trading day of Placing Shares 8.00 a.m., 17 AugustDespatch of share certificates for the Placing Shares 23 August PROPOSED PLACING OF UP TO 293,333,333 NEW ORDINARY SHARES AT 3.75p PER PLACING SHARE TO RAISE AN AGGREGATE OF UP TO £11,000,000 1. Introduction The Company announces that it has entered into the conditional Placing Agreementwith RBC Capital Markets to raise the sum of up to £11,000,000 before expensesby the issue of up to 293,333,333 New Ordinary Shares at 3.75p per share. Theproposed Placing is conditional, inter alia, on Shareholder approval of theProposals. A circular in connection with an EGM to approve the Proposals will beposted to Shareholders today. 2. Background to the Company Rift Oil was established in November 2004 to acquire a 65% interest in an oiland gas exploration licence, namely PPL 235, in western PNG. It acquired thisinterest in December 2004 through its subsidiary Foreland Oil Limited, in returnfor a commitment to spend US$6 million (approximately £3.2 Million) on theexploration and development of PPL 235. The remaining 35% interest in the PPL235 Licence is held by TOPPNG. PPL 235 covers a total area of approximately 2,910 sq km and lies within theForeland Basin, an area southwest of the PNG highlands approximately 500 km westfrom the capital, Port Moresby. The Company has chosen the Douglas Prospect andthe Puk Puk-1 Prospect as the initial targets on PPL 235. In January 2005, Foreland Oil (for and on behalf of the Company) and TOPPNGentered into a joint venture operating agreement in relation to PPL 235 Licence. Between December 2004 and March 2005, the Company raised a total of £4,505,000from a range of private investors pursuant to the Offer for Subscription toenable it to meet its initial obligations in relation to the PPL 235 Licence,and as general working capital. On 10 April 2006, the Company raised anadditional aggregate sum of £1,204,000 by way of further private placing. On 10 April 2006, the Company effected a bonus issue to its Shareholders, byutilising the share premium reserve created through the Offer for Subscription,by allotting and issuing, credited as fully paid, an additional 7.3 new OrdinaryShares for every 1 Ordinary Share held by such shareholders who were on theRegister of Members as at 10 April 2006. The effect of this was to reduce eachShareholder's cost per share, for those who subscribed under the Offer forSubscription, to approximately £0.03 per Ordinary Share. On 19 April 2006, the Company's entire issued share capital was admitted totrading on AIM and it raised £2.3 million before expenses, through a privateplacing of 24,080,000 new Ordinary Shares and a placing on admission to AIM of22,600,000 new Ordinary Shares, both at £0.05 per share, giving the Company amarket capitalisation at the placing price of £17.3 million. The Joint Venture experienced difficulties in securing an appropriate rig inorder to begin the proposed drilling program on PPL 235. This was due to thethen current high demand worldwide for the hire of drilling rigs. This led tothe decision by the PPL 235 Joint Venture, in late July 2005, to purchase theCoral Sea-1 Rig, a heli-transportable, free standing rig. The rig has since beenacquired by the Group. On 6 June 2006, the Company announced that it had raised £540,000 (beforeexpenses) through a placing of 10,800,000 new ordinary shares in the Company at£0.05 each. The new funding was arranged in order to assist in the financing theongoing appraisal of the Douglas Well. On 30 August 2006 Foreland Oil elected,under the terms of the PPL 235 JVOA to become operator of the PPL 235 JointVenture. On 16 November 2006, the Company announced that it had accepted the offer of theMinistry of Petroleum and Energy in PNG of the PPL 261 Licence. PPL 261 coversapproximately 4,000 sq km immediately north of PPL 235. The PPL 261 JointVenture holds the PPL 261 Licences. Under the terms of the PPL 261 JVOA, TOPPNGhas a 50 per cent. interest in PPL 261 with Foreland Oil (for and on behalf ofthe Company) having the remaining 50 per cent. participating interest. The grantof the PPL 261 Licence increased the area in which the Company has an interestto approximately 7,000 sq km. On 20 March 2007, Foreland Oil entered into a non binding Memorandum ofUnderstanding ("MOU") with Alcan South Pacific Pty Ltd ("ASP"). The MOU sets outthe activity to further investigate the supply of approximately 40 BCF ofnatural gas per annum over 20 years to ASP's Gove Alumina Refinery in theNorthern Territory of Australia. This work programme is expected to becompleted by mid 2008 and aims to provide sufficient information for the partiesto proceed to a binding agreement to supply natural gas to Gove. Such anagreement would, among other things need to address the questions of determiningeconomic and practical feasibility of the construction of a pipeline totransport gas to Gove, and at whose cost. If built, 276km of that pipeline wouldbe onshore and 610km would be offshore. To date, there have been two wells drilled on PPL 235. The first, Langia-1, wasdrilled in 1991 by Pecten. Douglas-1 was drilled by the PPL 235 Joint Venture in2006. Both have found gas, with the Douglas Well discovery of 2006 proving up 2good quality reservoirs. A loose 2D seismic grid of 2-5 km line spacing hassuccessfully delineated at least 7 further prospects within 20 km of Douglas.The CPR confirms the future 7 prospects' presence and estimates an average totalresource potential of 798 BCF (very close to the 800 BCF required over 20 yearsby ASP). Upside is considerable (P10 of 1.35 TCF), with Puk Puk 1 alone havingan upside close to 500 BCF. The proposed work programme utilising the PlacingProceeds (as set out below) is expected to further confirm the likelihood of theexistence of sufficient gas reserves that would be capable of supplying the GoveAlumina Refinery for at least 20 years. An updated CPR prepared by RPS Energy has today been added to the Company'swebsite and can be viewed at www.riftoil.com. It should be noted that the prospects evaluated by the CPR lie within an area of1,000 km2 (approx 33% of the entire PPL 235 area). The Directors believe thatfurther drilling and seismic acquisition will continue the high current successrate, whilst enlarging existing prospects, extending proven hydrocarbons intodeeper known reservoirs and revealing new prospective areas. Within thiscontext, the Directors believe that the target of proving 800 BCF to satisfy theAlcan plant demand of the Gove Alumina Refinery has an encouraging possibilityof success. 3. Background to and reasons for the Placing and Use of Proceeds The purpose of the fundraising is to seek to prove up reserves within PPL 235 toincrease the prospect of commercialising the discovery. It is intended that if the Placing is fully subscribed, the Placing Proceedswill be utilised approximately as follows: Douglas-1 Well Testing £0.65mPuk-Puk Drilling and Testing £5.50mSeismic study £1.25mRig work/surveys £0.50mContingency £1.35mOverheads £1.15mExpenses of the Placing £0.60m Total £11.00m . In view of the extra time and expense required to produce a UKLA-approvedprospectus, which would be required if the Placing also involved an open offerto Shareholders or a rights issue, the Directors have decided to undertake thePlacing with a restricted number of institutional investors. The Placing is notunderwritten. 4. Principal Terms of the Placing and the Share Consolidation The Company proposes to raise up to £11,000,000 (£10,400,000 net of expenses) bythe allotment and issue of up to 293,333,333 New Ordinary Shares at 3.75p perOrdinary Share pursuant to the terms of the Placing. The Company has enteredinto a Placing Agreement with RBC Capital Markets, which has, as the Company'sagent, conditionally placed such shares with institutional investors. The Placing is conditional, inter alia, upon: (i) the passing of the Placing Resolutions; (ii) the Placing Agreement becoming unconditional and not having beenterminated in accordance with its terms; and (iii) Admission of the Placing Shares having become effective by not laterthan 8.00 a.m. on 17 August 2007 or such later time and/or date as the Companyand RBC Capital Markets may agree (but, in any event, not later than 8.00 a.m.on 31 August 2007). The Placing Shares will be issued fully paid and will be identical to and rankpari passu in all respects with the New Ordinary Shares arising on theconsolidation of the Existing Ordinary Shares pursuant to the ShareConsolidation, and will rank in full for all dividends and other distributionsdeclared, made or paid on or after Admission in respect of the ordinary sharecapital of the Company. If any of these conditions is not satisfied, the PlacingShares will not be issued under the Placing. The Company has, under the terms of the Placing Agreement, granted to RBC,subject to Admission, the Warrants to subscribe for 977,000 New Ordinary Shares,such Warrants being exercisable at the Issue Price at anytime from the firstanniversary of Admission until the second anniversary of Admission. The Directors have undertaken to the Company and RBC that, for a period of 6months from the date of Admission they will not dispose of any Ordinary Sharesheld by them, or their connected persons, and for a further 6 months after thatany such disposal is to be concluded through RBC (or the broker of the Companyfrom time to time) in accordance with RBC's (or such other broker's)requirements in order to maintain an orderly market in the Ordinary Shares ofthe Company. Shareholder Irrevocables Thornaby Limited and Ocarina Investments Limited, who between them hold130,695,111 Existing Ordinary Shares, representing in aggregate 32.3 per cent.of the Issued Share Capital at the date of this document, have irrevocablyundertaken to vote in favour of the Resolutions. Thornaby Limited is a companywhose entire issued share capital is owned by the IR Gowrie-Smith FamilySettlement, of which Mr Gowrie-Smith is a beneficiary. Ocarina InvestmentsLimited is a company whose entire issued share capital is owned by the trusteeof the DJ Lees Family Settlement the beneficiaries of which are David Lees andcertain members of his family. Directors and their connected parties participation in the Placing The Company has been informed by Thornaby Limited, Ocarina Investments Limited,John Bentley & Peter Mikkelsen that they currently intend to participate in thePlacing. A further announcement will be made by the Company in the event thatany of these parties enter into a binding commitment to participate in thePlacing. Recommendation The Directors unanimously recommend that Shareholders vote in favour of theResolutions, as they have irrevocably undertaken to so in respect of their ownbeneficial holdings of Existing Ordinary Shares, representing in aggregateapproximately 0.5 per cent. of the issued share capital of the Company at thedate of this document. All defined terms in the Circular shall have the same meaning in thisannouncement. Glossary "BCF" Billion Cubic Feet"P10" 10 per cent probability that value will be greater than or equal to stated value"TCF" Trillion Cubic Feet This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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