88 Energy raises AUD 11m from institutional investors
Updated : 12:42
88 Energy announced on Tuesday that it has reached agreement regarding a placement to raise gross proceeds of AUD 11m, to two US-based institutional investors.
The AIM-traded firm said the net proceeds will be used to strengthen the Company's balance sheet ahead of the upcoming drilling of Icewine 2 in the first quarter of 2017, pursue complementary growth opportunities in Alaska and for general working capital purposes.
Pursuant to the placement, 88 Energy will issue 275m ordinary shares of no par value at a price of 4 Australian cents each.
In addition, 137.5m unlisted options at an exercise price of 5.5 cents expiring on the five-year anniversary of completion will be issued to the investors.
If exercised, the placement options would result in receipt of supplementary funds of AUD 7.6m at a premium to the current market price.
After the two-year anniversary of the placement, the company said it may redeem the placement options for 1 cent per option share, if the volume weighted average price of its ordinary shares is above 12 cents per share for 20 consecutive trading days.
The board said there could be no guarantee that the Placement Options or any of the other options on issue will be exercised.
“It is encouraging to receive this level of support from the US, where Project Icewine is domiciled,” said 88 Energy managing director Dave Wall.
“The company is now in a stronger position to exploit opportunistic growth opportunities in Alaska and has increased flexibility in regards to upcoming operational activity.”
Wall said progress at the Icewine 2 production test well remained on track for commencement of drilling in the first quarter of 2017.
“Success at Icewine 2 could unlock over 2.5 billion barrels of oil potential for our shareholders and we are, understandably, looking forward to the upcoming well with great anticipation.
“We would like welcome our new US investors to the register and give special thanks to our US based broker, Maxim Group, for providing timely market advice and smooth execution on this placement.”