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88 Energy to raise A$12mln ahead of Merlin well

The Alaska explorer plans to bolster its funds ahead of new well drilling, and, it also announced that managing director Dave Wall will leave the company in May

88 Energy Ltd - 88 Energy to raise A$12mln ahead of Merlin well

88 Energy Ltd (LON:88E) has launched a A$12mln (£6.7mln) share placing to support its ongoing evaluation of the conventional and unconventional prospectivity on the North Slope of Alaska.

The exploration company seeks to sell new shares at a price of 0.8 Australian cents per share, equivalent to 0.45p, which puts the placing at a 27% discount to Tuesday’s closing price in Australia.

It comes as the company is preparing for the drilling of the Merlin-1 exploration well alongside a joint venture partner. The company is on schedule to spud the well in late-February or early-March.

The new funds will also allow the company to identify and exploit new opportunities in the region.

At the same time, the exploration company this morning announced that David Wall has tendered his resignation as managing director and will leave the company in May 2021.

The company said it will transition the role of managing director to Ashley Gilbert, currently chief financial officer and company secretary, initially taking the job on an ‘acting basis’ prior to Wall’s departure.

The placing is being run as a bookbuild which is to be managed by brokers Cenkos Securities, in the UK, and EurozHartleys, in Australia.

It will open immediately and the closing is at the discretion of Cenkos, EurozHartleys and the company. 

The placing is expected to bolster working capital resources. At the end of December, as previously announced, the company had A$14.8mln of cash, including amounts held in joint venture bank accounts.

Providing more detail, the company noted that the proceeds will strengthen its balance sheet and cover its share of any potential cost overruns for the Merlin well, follow-on flow testing (if the well is successful) along with it share of the costs of the planned Harrier-1 well.

Merlin and Harrier are both prospects within the Project Peregrine acreage, acquired by 88 Energy in 2020 through the merger with XCD Energy.

Additionally, the company said proceeds will also be used for its operations at the newly acquired Umiat oil field.

Umiat, which lies immediately south of Project Peregrine, is host to several wells. The company will carry out a full field review to determine at what oil price Umiat may be commercial as a stand-alone development, and, what optimisation of prior development plans is possible. 

88 Energy expects that Umiat would contribute significant value to any field development at Project Peregrine, subject to well results.

The company also today noted that, follow an annual review, it has decided that certain parts of the Project Icewine acreage are no longer considered prospective and consequently certain leases won’t be renewed.

Such ground represents around 25% of the project area, some 231,000 net acres.

Quick facts: 88 Energy Ltd

Price: 0.55 GBX

AIM:88E
Market: AIM
Market Cap: £66.89 m
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