TIDM88E
RNS Number : 5578B
88 Energy Limited
14 February 2022
This announcement contains inside information
88 Energy Limited
PLACEMENT TO RAISE A$32M
Highlights
-- Oversubscribed share placement raising A$32 million gross
proceeds (A$30 million net proceeds).
-- Issue price of A$0.035 per share represents a 10.3% discount
to the VWAP on the ASX for the thirty calendar days to 9 February
2022
-- Funds to be directed towards Merlin-2 appraisal well drilling
and flow test program, new ventures opportunities and working
capital.
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or
the Company ) is pleased to advise that it has successfully
completed an oversubscribed bookbuild to domestic and international
institutional and sophisticated investors to raise A$32 million
before costs (the Placement ). This is to be achieved through the
issue of 914,285,714 fully paid ordinary shares in the Company (the
New Ordinary Shares ) at an issue price of A$0.035 (equivalent to
GBP0.018) per New Ordinary Share) (the Placement Price ).
The funds raised under the Placement, which have been increased
to satisfy investor demand, together with the Company's existing
cash reserves (A$32.3 million as at 31 December 2021), are to be
used to fund the planned Merlin-2 well drilling and appraisal
activities including flow test program, contingencies, new ventures
portfolio expansion opportunities, and working capital.
With the recent issuance of the Permit to Drill, the Merlin-2
well is now scheduled to spud in early March 2022, with all major
permitting and planning complete, snow road pioneering construction
complete and the mobilisation of the Arctic Fox rig commencing to
the drilling location.
COVID-19 supply chain issues and global commodity price
increases have placed some pressures on budgeted Merlin-2 costs,
however lessons learned from the Merlin-1 program have allowed 88
Energy to mitigate many of these cost pressures. The Company is
expecting the cost to drill the Merlin-2 well plus completion of
the wireline program to total approximately US$28 million
(approximately A$39 million).
88 Energy Managing Director and CEO, Ashley Gilbert,
commented:
"Completion of this placement ensures 88 Energy is funded to
undertake the full suite of targeted appraisal activities at the
Merlin-2 well, including flow testing of the well. While budgeted
well costs have increased due to global supply chain pressures, it
is important to note that 88 Energy is still expected to drill and
appraise Merlin-2 at substantially lower cost levels relative to
other operators on the Alaskan North Slope."
"88 Energy has also been actively assessing multiple new venture
opportunities across the asset life cycle to expand our portfolio
of assets and opportunity types. We are targeting assets that are
complementary to the existing portfolio and provide shareholders
with exposure to additional value creation potential. The Company
has signed a non-binding memorandum of understanding to acquire a
conventional producing oil and gas asset in the Permian Basin Texas
USA, with due diligence and documentation nearing completion.
Subject to entry into a binding agreement, the Company expects that
this opportunity will deliver immediate cash flow and near-term
production drilling upside and we look forward to providing
shareholders more details when such agreement is entered. "
Euroz Hartleys Limited acted as Sole Lead Manager and Sole
Bookrunner to the Placement. Cenkos Securities Plc is acting as 88
Energy's Nominated Adviser and Sole Broker to the Placement in the
United Kingdom. Inyati Capital Pty Ltd (Inyati) acted as Co-Manager
to the Placement. Commission for the Placement was 6% (plus GST) of
total funds raised across Euroz Harleys Limited, Inyati Capital Pty
Ltd and Cenkos Securities Plc. In addition, the Company will issue
36,000,000 Unlisted Options (exercisable at $0.06 on or before the
date which is 3 years from the date of issue) to the managers of
the Placement (Broker Options).
The issue of the 914,285,714 New Ordinary Shares and Broker
Options are not subject to shareholder approval as the issuance
will fall within the Company's placement capacity pursuant to ASX
Listing Rule 7.1. The New Ordinary Shares will rank pari passu with
the existing ordinary shares in the Company, with settlement
scheduled for Monday 22 February 2022.
Following the issue of the New Ordinary Shares, the Company will
have 15,725,361,910 ordinary shares on issue, all of which have
voting rights. The figure of 15,725,361,910 ordinary shares may be
used by shareholders as the denominator for the calculations by
which they will determine if they are required to notify their
interest in, or change their interest in, the Company.
The Company notes that several media reports have stated that
the Company will issue shares to a key drilling contractor involved
in the Merlin-2 operations for payment of invoices incurred in
relation to services associated with the Merlin-2 operations. The
Company wishes to update the market that it does not intend to
issue such shares.
As referenced in the quote from the Managing Director above, the
Company notes that it is continually in discussions with various
parties with respect to new venture opportunities across the asset
life cycle to expand its portfolio of assets and opportunities.
Such potential opportunities are not announced until such time as
the Company has agreed the material commercial and legal terms with
the relevant counterparty or counterparties, and customary due
diligence is completed. Until the material commercial and legal
terms have been agreed and due diligence completed, there can be no
guarantee that such discussions, whether or not they have been
disclosed, will lead to the announcement or completion of a binding
agreement.
In particular, the Company notes that it has recently signed a
non-binding Memorandum of Understanding ( MoU ) relating to a
potential acquisition of a conventional producing oil and gas asset
in the Permian Basin, Texas, USA. The key commercial terms of the
potential acquisition as outlined in the non-binding MoU are for
the Company to acquire a non-operating 75% working interest in the
project for consideration of approximately US$9 million as well as
a further US$1.6 million working capital fund, to be paid in cash
and 88 Energy shares. The non-binding MoU contemplates that the
vendor, Lonestar I LLC, will remain as Operator of the project.
2021 gross production at the project totalled approximately 110,000
BOE, with a planned work program in 2022 expected to increase
production. There are no certified reserves available for the
project at this stage, and the Company would expect to release
certified reserves to the market on announcing a binding agreement
to proceed with the acquisition, should the transaction proceed. As
noted above, the Company has only entered into a non-binding MoU in
relation to this potential acquisition at this stage, with due
diligence advanced and final documentation nearing completion. The
Company expects that the documentation will be executed imminently.
However, execution and completion of the potential transaction is
not guaranteed and remains subject to all final documentation being
agreed and due diligence completed. There is no guarantee that
negotiations will lead to a binding agreement or a completed
transaction, or that the final terms will be as set out in the
non-binding MoU.
This announcement has been authorised by the Board.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Finlay Thomson , Investor Relations Tel: +44 7976 248471
Fivemark Partners , Investor and Media Relations Tel: +61 410 276 744
Andrew Edge / Michael Vaughan Tel: +61 422 602 720
EurozHartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities Tel: + 44 131 220 6939
Neil McDonald / Derrick Lee
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END
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