Mosman raises £0.4m to help fund Champion drilling

The AIM-traded firm said investors would also receive one warrant to subscribe for a further share at an exercise price of 0.15p, with a term of 12 months.

It said the net proceeds raised from would be used towards the drilling of the Falcon well at the Champion Project in Texas.

Under the farm-in agreement with Baja Oil and Gas, Mosman has a 60% working interest, and will pay 80% of the first well cost, in the Champion Project.

That well had an estimated total cost of $0.7m (£0.56m) to drill and complete, with Baja having a 30% interest, and will pay 10% of the well cost, while Contour Exploration and Production, owned by Mosman’s US manager Howard McLaughlin, has 10% of the lease and will pay 10% of the well cost.

In addition to Falcon, several other prospects in the project area have been mapped by Baja using 3D seismic, including Galaxie, Durango, Corona East and Corona West.

“Falcon is one of several prospects on the 240 acre Champion lease which is adjacent to existing production facilities,” said chairman John Barr.

“Mosman has 60% working interest in the lease, and this level of equity means that a successful well would enable a significant increase in net production to Mosman.”

Barr said Falcon would also provide the company with “important geological information” to refine several prospects on the lease, including Galaxie, which already had a well plan and drilling location identified.

“We expect to shortly complete planning, start preparation of the Falcon wellsite in July, spud the well in August, and announce results a few weeks later.

“In addition to Falcon activity, the workover of the Stanley-1 well is now underway and should be completed next week. The workover at Greater Stanley awaits approvals by the relevant authorities.”

Barr noted that the operator of Stanley had indicated on Thursday that the drilling of Stanley-4 was now planned for August, adding that an authorisation for expenditure for that drill, where the site works have already been completed, was expected shortly.

“With reduced drilling activity, more rigs are available, and this is expected to result in lower drilling costs.

“This placing, along with the recent Blackstone settlement, will result in Mosman having cash of over AUD 1m (£0.56m).

“The pending sale of the Welch Oil Field announced on 20 May and due to complete shortly, could increase this to AUD 1.4m.”

That, Barr said, meant Mosman was now able to invest in several of its highest-ranked projects.

“Recent swift action by the board has resulted in an exceptional turnaround from the position in March, when falling oil prices and the pandemic led to a severely challenging business environment.”

At 1508 BST, shares in Mosman Oil and Gas were down 37.29% at 0.088p.