Strike Energy initiates major fund raising
THE BOURSE WHISPERER: ASX-listed gas and oil-condensate producer Strike Energy is undertaking a major capital raising to raise a total of $16.8 million.
The company said the raising is the first of a series of initiatives to position it for a period of increased activity and growth across its portfolio of assets, in particular, its unconventional shale prospects in the United States.
The capital raising comprises two components. The first is a placement to institutional and sophisticated investors with the second being a fully underwritten non-renounceable entitlements offer to all shareholders of the company.
Approximately half of the placement has already been taken up by M H Carnegie & Co Pty Ltd.
Blackswan Equities Limited, which acted as lead manager to the placement and M H Carnegie have underwritten the non-renounceable entitlement offer on a joint basis.
Strike is undertaking the raising to fund ongoing and successful exploration activities in the United States where the company is experiencing a period of increased and high quality deal flow.
In recent months Strike has secured positions in two opportunities in the United States – the fast developing unconventional Eagle Ford Shale and conventional Wilcox Slope plays, located in Texas and Louisiana respectively.
The company considers both projects to be tremendous opportunities with large scale potential, with oil and liquids emphasis as well as being on trend from significant discovery wells.
While Strike has the proceeds of the capital raising earmarked primarily for its US activities, it also said this does not diminishment the company’s view of the potential in its Australian assets.
The company said the developing unconventional oil and gas trend in its Southern Cooper acreage, even though at an earlier exploration stage than the US unconventional opportunities, is expected to become a major focus of activities in the future.
“The Capital Raising is designed to provide the company with additional funds needed to rapidly progress our portfolio of assets both in the United States and Australia,” Strike Energy managing director Simon Ashton said in the company’s ASX announcement.
“We believe that some of our new assets have the potential to be game-changing energy assets, and will result in material value uplift for our shareholders.
“Equally, the placement serves to introduce some well-regarded institutional investors to the register.
“These investors not only have deep sector expertise and a track record of investment success in the industry, they also have the capacity to be long-term stable owners capable of providing strong financial support to the company through its next phase of growth.”