LONDON (ShareCast) - (Sharecast News) - 88 Energy announced its plans to raise AUD 20m (£10.6m) before expenses on Tuesday, to finance the drilling and logging of the Merlin-2 well, among other projects.
The AIM-traded firm said the funds were being raised through a bookbuild, adding that there was the ability to accept over-subscriptions within its existing placement capacity.

It said the shares were being placed at a price of 2.8 Australian cents, equivalent to a discount of 12.5% to the closing price of its shares on the ASX on 30 August.

"The net proceeds of the Placing, together with the company's existing cash reserves, will strengthen the company's balance sheet and will provide the company with sufficient capital to finance the drilling and logging of the Merlin-2 appraisal well in the first quarter of 2022, targeting 652 million barrels in the N20, N19 and N18 horizons, fund lease acreage payments and enable identification and execution of potential new project opportunities," the board said in its statement.

"Following completion of the proposed placing, the company will have sufficient cash to fund its ongoing working capital requirements and general and administrative overheads for at least 12 months."

Looking at its current trading, 88 Energy noted that during the first half, it completed the Merlin-1 drilling programme, and started a post-well evaluation which successfully demonstrated the presence of oil in multiple stacked sequences in the Cretaceous Nanushuk Formation (N20 and N18 targets), while a new target (N19) was penetrated and returned a strong hydrocarbon signature following geochemical analysis.

The positive results from operations at Merlin-1 resulted in the firm planning an appraisal well, Merlin-2, which was scheduled for drilling during the Alaskan winter drilling window in the first quarter of 2022.

In June, 88 Energy entered into an agreement to acquire the 50% working interest in Project Peregrine held by Alaska Peregrine Development Company, meaning it now held a 100% interest and full control of the project, which could involve seeking a further farm-out to a new partner with greater technical and operational capability ahead of future planned drilling and exploration activity.

On 8 January the company, via its wholly-owned subsidiary Emerald House, entered into a sale and purchase agreement with Malamute Energy and Renaissance Umiat to acquire the Umiat oil field, located immediately adjacent to Project Peregrine.

"Further studies conducted in conjunction with the Merlin-1 post well testing and analysis has identified additional upside at the Umiat oil field, and the company has commenced a review on optimisation of historic development plans in order to establish the commercialisation potential," the directors explained.

"Following the encouraging drilling results from the neighbouring Talitha-1 well, 88 Energy's geoscience team is undertaking a re-assessment of its Project Icewine acreage, ahead of a potential farm-out of the company's interests."

The firm was planning for potential future exploration drilling on its Yukon acreage, which would be subject to farm-out and other considerations, such as the ongoing discussions with nearby lease owners for a joint development area, which the board said had the potential to "unlock value" in the area.

At 1454 BST, shares in 88 Energy were down 6.29% at 1.55p.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE