Eligible shareholders will be able to subscribe for one new share for every three shares they hold at the record date, at a subscription price of 0.3 cents per share.
This represents a discount of about 35% to the 15-day volume-weighted average price (VWAP) of Whitebark shares.
The proceeds from the offer will be used by the company for the following purposes:
- Working capital (comprising operational and capital costs accrued and pending);
- Acquisition of land mineral leases;
- Wizard Lake Field maintenance and workovers; and
- Entitlement offer costs.
The energy sector has experienced major disruptions from a depressed oil price and from COVID-19 restrictions.
This has impacted Whitebark’s cash flow generation and required production from its Wizard Lake wells to be constrained to preserve the long-term asset value.
At the same time, the price shock in the sector has created attractive acquisition opportunities.
These disruptions have provided an opportunity for Whitebark to proceed with maintenance of the existing Rex wells to optimise production capacity, and to better position the company to take advantage of select asset acquisition opportunities.
Strong support from the chairman
Whitebark chairman Charles Morgan said: “The board has carefully considered the current energy market circumstances and has decided to proceed now to strengthen the company’s operational and financial capacity to emerge from the energy sector and COVID 19 crisis in a better position.
“The offer has been attractively priced to encourage broad shareholder participation, and has been structured to give existing shareholders priority in order to maintain or increase their exposure.
“The directors of Whitebark believe this issue will better position the company to recommence its growth momentum. I intend to participate and contribute approximately $250,000 to the offer.”