IOG proposes £8.5m placing and subscription to cover costs at Kelham

IOG said new ordinary shares will be issued to existing and new investors pursuant to the placing at a price of 25.0p per each through finnCap and Peel Hunt LLP, which will act as joint bookrunners.

In addition to the placing, IOG intends to enter into subscription agreements with certain directors and senior executives for 200,000 new ordinary shares.

The AIM-listed firm stated that the total number of new ordinary shares to be issued pursuant to the fundraise will be less than 10% of its existing issued share capital.

IOG said net proceeds of the fundraise would primarily be used to pursue a "high-return incremental opportunity" by funding its 50% net share of the cost of drilling a dual-lateral appraisal well at the Kelham North and Kelham Central prospects in licence P2442.

"Management estimates that Kelham North and Kelham Central contain gross mid-case resources of 36 Billion cubic feet equivalent and 42 Bcfe respectively, while the wells have geological chances of success of 80% and 70%, respectively," said IOG.

"If successful, these assets would form the basis of a new Southern Hub that, with the Abbeydale discovery tied back subsea, has an estimated IRR of 47% at the company's base planning case gas price of 45p/therm, directly benefitting from the existing Saturn Banks infrastructure. In the company's view, successful appraisal would also significantly de-risk the other discoveries and prospects in the P2442 licence, enhancing the commercial potential of the area."

As of 0945 BST, IOG shares were down 3.16% at 26.39p.