88 Energy receives cash injection of US$18.7 million
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
88 Energy Limited (ASX:88E, AIM: 88E, OTC:EEENF) has entered into an agreement that will facilitate the sale of all the Alaskan Oil and Gas Tax Credits currently held by Accumulate Energy Alaska, Inc, a 100% owned subsidiary of 88 Energy.
The sale price of the Tax Credits is US$18.7 million cash, payable upon completion of the sale and transfer of the outstanding tax certificates.
Transfer of the certificates and payment of the proceeds is anticipated to occur within the next few weeks, subject to Alaskan Department of Revenue approvals and processes.
The purchaser is a large oil and gas company in the US with multiple exploration and production assets and has capacity to fund transactions of this nature.
The transaction accelerates the timeframe of 88 Energy’s value realisation from the Tax Credits, which under current estimates would not have been fully paid out by the State of Alaska until 2026.
Proceeds to leave 88 Energy debt free
The majority of the proceeds from the sale are to be applied towards full repayment of 88 Energy’s current outstanding debt of US$16.1 million which was due to mature on 30 December 2022.
Early repayment penalties have been waived by the financier, FCS.
The residual sale consideration of US$2.6 million is to be receipted by 88 Energy, which will be applied towards the company’s working capital requirements.
The early repayment of debt also saves on future cash payments that would have been made towards interest on outstanding debt.
The overall impact of this transaction is not considered material to 88 Energy as the Tax Credits applied to be cashed out and approved by the Alaskan Government totalled US$19.1 million (compared to the proceeds received from sale of tax credits of US$18.7 million).
Commenting on this clearing of the decks, managing director Ashley Gilbert said, “This is a transaction which accelerates the realisation of value of the Alaskan Oil and Gas Tax Credits and the early repayment of outstanding debt due to be repaid by the end of 2022.
"As a result of the transaction, the company is now set to be debt-free with reduced annual overheads of over US$1 million in associated finance costs."
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.