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Lansdowne Oil & Gas agrees placing and debt-for-equity swap in wake of Barryroe farm-out breakthrough

Published: 16:43 06 Apr 2018 AEST

oil and gas operations
The farm-out is expected to complete later this year

Lansdowne Oil & Gas PLC (LON:LOGP) has raised £900,000 through a share placing, giving it sufficient capital to cover its costs for the Barryroe project until the group’s Chinese farm-out deal completes.

Some 69.2mln new shares are being sold at a price of 1.3p each. The placing investors will also receive share warrants, which can be exercised at 1.3p as well.

The Irish oil firm’s farm-out deal sees Lansdowne selling half of its stake in Barryroe (its interest reduces to 10%) and the transaction is expected to close in the third quarter.

In Friday morning’s statement, LOGP told investors that it will now have on-going working capital though to mid-2019.

READ: Providence Resources brings in Chinese group to develop Barryroe

As well as the share placing, which has been organised by Brandon Hill Capital, the broker has also agreed to convert a £326,911 debt into equity (at the same pricing as the share placing).

Similarly, the LC Capital Master fund has agreed to switch a £680,000 loan note debt into Lansdowne equity. It retains a holding of further loan notes, and it has agreed to extend the maturity to June 30.

It will ultimately see Brandon Hill hold 12.66% of the company, while the LC Capital Master Fund will hold 29% of the company.

Last week, it was announced that a Chinese consortium, backed by state funds, would acquire a 50% stake in Barryroe, taking 10% from Lansdowne and 40% from operator Providence Resources PLC (LON:PVR).

The transaction sets into motion a series of operations that are expected to lead to the field’s development. Specifically, the farm-out deal commits the Chinese to fund a three-well drill programme, designed to further appraise and test Barryroe’s reservoirs.

The Chinese will be responsible for providing non-recourse financing to Providence and Lansdowne, with the loan repaid from future production volumes.

Finances on a better footing

It transforms the proposition for both Lansdowne as well as the financiers that supported the group through the austere period as the company held out for a farm-out deal.

In today’s statement, Lansdowne chairman Tim Torrington said: “Following the recent announcement of the Barryroe farm-out to APEC and the Chinese consortium we have moved quickly to put the company's finances on a firm footing and I would like to thank all our existing and new shareholders for their support.

“I would particularly like to acknowledge our major shareholders, LC Capital and Brandon Hill Capital Limited for their support of the company through the difficult period caused by the decline in the oil price.”

He added: “With a clear pathway forward on Barryroe and continued improvement in the oil price, we can now return to focus upon value creation"

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