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88 Energy hails “step change” $25 million raising
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88 Energy (ASX | AIM: 88E) has hailed an oversubscribed $25 million placement as a “step change” moment.
The Alaska-focused oil and gas explorer told its shareholders of the placement today, issuing just over 715 million shares at 3.5c each to raise $25 million.
It was originally planned to only raise $10-15 million with a stretch goal of $20 million, but 88E said “due to the high calibre of the proposed investors” and the level of interest in the stock, the board decided to stretch the goal again to $25 million.
Even at $25 million, 88E said, the offer was strongly oversubscribed.
The cash will go towards the funding of a 2D seismic campaign it currently has underway, and payments for the 174,000 acres it picked up as part of a government auction last November.
It will also add general working capital as 88E and joint venture partner Burgundy Xploration go about planning a follow-up to the Icewine-1 well – at this stage being planned as a horizontal well due to spud in the first quarter next year.
That well will give investors greater look through on the production capacity of the target HRZ shale, after Icewine-1 effectively de-risked technical “Achilles heels”.
Managing director of 88E Dave Wall said the strong support for the raising was testament to the technical success it had at Icewine-1.
“The level of support the company received from institutional and sophisticated investors in Australia and the UK is a step change to only a few short months ago, reflecting the substantial de-risking that has occurred at Project Icewine as a result of the recent Icewine-1 exploration well,” he said.
He also said the funding would effectively bring 88E “to the doorstep” of Icewine-2H, the follow-up to Icewine-1.
Earlier this month it outlined bullish numbers from DeGolyer and Macnaughton which indicated that the Icewine project could have as much as 1.4 billion barrels of recoverable oil.
Internal estimates, however, put this figure as high as 3.6 billion barrels.