88 Energy announces AUD 12m fundraise

88 Energy proposed to raise up to AUD 12m (£6.7m) before expenses on Wednesday, to fund the ongoing evaluation of prospectivity of its existing assets, and to pursue new opportunities in Alaska.

The AIM-traded firm said the fundraise would take place via a placing of new shares at a price of 80 Australia cents each.

It noted that the price was equivalent to a discount of 27% to the closing price of its shares on the Australian Securities Exchange on 9 February.

The board said the proceeds of the placing, together with its existing cash reserves, would be used to fund the ongoing evaluation of the conventional and unconventional prospectivity of its existing assets, and to enable it to identify and exploit new opportunities on the North Slope of Alaska.

It said the proceeds would strengthen its balance sheet and provide it with sufficient capital to finance its share of any potential cost overruns associated with the drilling of the Merlin-1 well at Project Peregrine, and, in the event of a successful drilling and logging at Merlin-1, its share of costs associated with subsequent flow testing operations.

They would also be used for costs assumed in connection with the recently-acquired Umiat Oil Field, as well as its share of costs associated with the drilling of the Harrier-1 well at Project Peregrine, and its ongoing working capital requirements and general and administrative overheads for at least 12 months.

“The company is on schedule to spud the Merlin-1 well in late in late-February to early-March, with drilling and logging of the well anticipated to be completed by mid-March,” the 88 Energy board said in its statement.

“Subject to positive results from the Merlin-1 logging program and having adequate funding in place through the placing, the joint venture expects to then elect to flow test the well which is anticipated to last up to 10 days before proceeding to the spudding of the Harrier-1 well in late March to early April.

“It should be noted that the drilling of the Harrier-1 well remains subject to scheduling, permitting and related government approvals, as well as agreement between the joint venture parties on the forward programme, which may be subject to change.”

At 1215 GMT, shares in 88 Energy were down 12.86% in London, at 0.49p.