LONDON (ShareCast) - (Sharecast News) - Hammerhead Resources - the biggest investment of FTSE 250 company Riverstone Energy - has secured a preferred share equity commitment of up to CAD 300m (£175.19m) that it said would provide it financial flexibility to continue its organic growth program across its resource base, it announced on Tuesday.
The firm is a privately-owned oil and gas producer focused on the liquids-rich Montney play in Alberta, and the largest investment of Riverstone Energy, representing 26.9% of that company's gross assets as at 30 June.

It said the preferred share equity commitment of up to CAD 300m would be led by affiliates of Riverstone Holdings, with the financing also featuring a rights offering to certain existing common shareholders.

Riverstone Energy owns approximately 31% of Hammerhead on a fully-diluted basis, with an announcement to be made in in due course regarding the extent of its participation in the preferred equity commitment, if any.

"Proceeds from the equity commitment will be used to fund development activities principally in the Gold Creek and Karr areas, driving continued optimized capital efficiency with the use of multi-well pads in areas of existing infrastructure, combined with implementation of leading completion technologies," Hammerhead said in its statement.

"HHR believes that its balance sheet strength, industry-leading liquids growth, and secured firm egress differentiate the company from its peers."

Hammerhead was currently producing more than 28,000 boe/day, with a 42% weighting towards light oil and liquids.

Annual production was expected to average more than 27,000 boe/day in 2018, representing a 40% increase over 2017 levels.

Since Riverstone's initial investment in 2014, the company had increased production at a compound annual growth rate of over 70%, with a substantial corresponding increase in cash flow and reserves.

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