Buru Energy Ltd's (ASX:BRU) shareholders have embraced the company's recently outlined strategy to accelerate development of its 100% owned Ungani Oilfield, located in the Canning Basin of Western Australia.
Buru marketed this strategy to investors during its 1 for 5 rights issue to raise $10.2 million at $0.15, with the offer being heavily oversubscribed with $14.5 million in applications received for the entitlement and shortfall shares.
Funds raised are to be used as part of the funding for the multiphase development program being undertaken at the Ungani Oilfield.
This program is aimed at increasing the field’s production capacity and recoverable oil resources and importantly, increasing Buru’s cash flow from the field, which was recently brought back into production through a new export facility.
The first lifting of crude oil from the export facility in Wyndham took place last week.
Details of the raising
The rights issue was heavily oversubscribed with applications totalling $14.5 million against a target of $10.2 million.
All entitlement shares will be issued in full, and normally this would then require a substantial scale back in the shortfall shares applications.
Rather than undertaking such a wholesale pro-rata scale back in respect of shareholders who have applied for shortfall shares, the board decided to make an additional placement of shares of $3.6 million.
This top-up share placement has been made only to existing Buru shareholders who submitted shortfall applications and who qualified as sophisticated and professional investors.
The company also received very strong interest from new investors from its recent roadshow but did not need to issue shares to new shareholders given the strong take-up from the existing shareholder base.
The additional $3.6 million will provide more funding flexibility and contingency allowances for Buru’s 2017/18 Ungani accelerated development program.
The program is planned to commence later this month with the mobilisation of the drilling rig to Ungani.
Eric Streitberg, executive chairman, commented:
"We are delighted with the strong support demonstrated by Buru’s large shareholder base with more than 2,250 applications received for this capital raising and applications for 42% more than the issue target.
"When we set out to seek the necessary funding to accelerate the development of our Ungani Oilfield, we wanted to give our existing shareholders first priority to participate in this funding process.
"The response to our new strategic direction and upcoming drilling program has been exceptional from both Buru shareholders and other investors as demonstrated by the rights issue take-up as well as the strong market support for the company’s shares."