PERTH (miningweekly.com) – ASX-listed Empire Oil and Gas on Thursday announced that it would raise A$15.7-million in a share placement and rights offer as part of its growth strategy.
The explorer noted that the raising would comprise a A$5.5-million share placement to sophisticated and institutional investors, priced at 0.5c a share. The placement would be undertaken under the company’s existing capacity, and would not require shareholder approval.
The placement would be followed by a one-for-four rights offer, which would also be priced at 0.5c each, to raise a further A$10.2-million. For every four shares issued under both the placement and the rights offer, investors would receive an attaching option, exercisable at 0.9c, and expiring at the end of April 2018.
“This raising is further evidence that we are delivering on the strategy we announced last September,” Empire CEO Ken Aitken said.
Empire noted that the proceeds from the raising would be used to primarily fund the drilling of the Red Gully North well, some 4 km from the production facility at Empire’s Red Gully gas and condensate project, in Western Australia. Red Gully North is estimated to have potential recoverable reserves in excess of 10 PJ.
The company has also begun studying options for expanding the Red Gully production facility, including assessing the economics of a liquid petroleum gas stripping plant. This would involve examining issues relating to capital costs, the optimum size of any expansion, funding options and sales prospects.
Proceeds from the raising would also enable Empire to advance early-stage exploration and discussions with third parties as part of its strategy to attract farm-in partners to explore its Perth basin acreage.
Meanwhile, Empire on Thursday also announced that it had finalised a drilling contract with contractor Enerdrill, allowing for the spud of the Red Gully North well in the December quarter of this year.
The Enerdrill contract also gave Empire the option to drill up to four wells elsewhere in Empire’s Perth basin acreage. In preparation for these wells, Empire would conduct a major airborne gradiometric survey across its acreage to generate leads and prospects.
“Our cash flow from the Red Gully project is set to grow significantly from August when Tranche 2 of our gas sales to Alcoa starts,” Aitken said on Thursday, adding that this followed from the company’s success in growing the gas reserves at Red Gully and improving the performance of the processing plant significantly.
“The capital raising, in conjunction with the signing of the drilling contract, enables us to drill Red Gully North, which has the potential to not only increase the life of the project but may also underpin an increase in production and cash flow.”