Petrel raises £0.25m as it looks to restart Iraq development

Petrel Resources has arranged a placing with ETX Capital to raise £0.25m before expenses through the issue of 7,692,308 new ordinary shares at a price of 3.25p each, it announced on Tuesday.

The AIM-traded firm said that, subject to “the appointment of responsible officials” by the new Iraq government, and the lifting of Covid-19 restrictions, it was expecting to enter requalification discussions with the Ministry of Oil.

Discussions could cover the company’s past studies on the Merjan-Kifl-West Kifl area, and the Mesozoic and Paleozoic potential of the Western Desert.

Pending such discussions, it said the investment would strengthen its balance sheet.

“Petrel is fortunate to have maintained strong relationships with Ministry of Oil officials, even during the darkest hours of sanctions, invasion, conflict, and Covid-19,” said director David Horgan.

“Our Iraqi director, Riadh, is a son of the renowned ‘driller’, Mahmoud Ahmed,” he explained, adding that in Iraq the company had found “world-class” geology.

“Prevailing circumstances obliged Petrel temporarily to dis-engage from on-the-ground operations in 2010.

“We saw too many challenges - both governance, political and financial - to justify risking shareholders' funds given the then-limited upside available.”

Horgan said that recent events were “transforming” that situation.

“A three-way rivalry among Saudi Arabia, Russia and American producers - aggravated by an unprecedented demand-hit caused by Covid-19 - crashed the oil price,” which he said was “crippling” high cost operations offshore, and unconventional reservoirs.

“As a low-cost producer, Iraq is now well positioned to exploit this historic opportunity.

“I believe that Petrel has the experience, contacts and board commitment to help drive forward the next phase of Iraqi oil development.”

At 1145 BST, shares in Petrel Resources were down 0.13% at 3.74p.