Pilot Energy shifts gear to raise $3.6 million

Published at Mar 31, 2016, in Energy

Pilot Energy (ASX:PGY) is ready to ramp things up, with a $3.6 million capital raising bagging it a new cornerstone investor group as it chases its ambitions of being a vertically integrated upstream player.

It told its investors earlier today that in a raising arranged by Patersons Securities, a series of four Australian and Hong Kong-based private companies will end up holding 45.4% of the company’s securities.

The deal will be done in two tranches, with a premium to the company’s 30 day volume-weighted average price of 34% and 100% respectively.

As part of the deal, the combined group will be able to nominate an executive director, a non-executive director, and an advisor to the board – all subject to shareholder and Foreign Investment Review Board approval.

Current directors Conrad Todd and Rory McGoldrick will step down to allow the new appointments.

Coming onto the board will be Benson Wong, Wilson Xue, and Xingjin Wang as the advisor.

The deal will allow PGY to meet current commitments on its leasing while providing “substantial” working capital for the company.

Wong said the group of four companies had been looking for an opportunity to invest in Australian exploration and production, with PGY offering an ideal entry point into the market.

“Our investor group has reviewed a large number of oil and gas investment opportunities over the past 12 months, and regards Pilot Energy’s management team, asset portfolio, and approach to business as offering a unique opportunity to create a leading Australian E&P [exploration and production] company,” Wong said.

Tranche one of the investment will be an investment of $800,000 to acquire 400 million shares at 0.2c per share, a 35% premium on PGY’s 30 day VWAP.

The second tranche, which needs to be signed off by shareholders at a meeting in June, is a deal to acquire a further 933.3 million shares at 0.3c each – raising $2.8 million at a 100% premium to PGY’s 30-day VWAP.

The Pilot play

Pilot Energy currently has four permits on its plate in WA, with one deepwater, one shallow water, and two onshore.

The deepwater block, WA-507-P has been heralded as possibly hosting multi-billion barrels of oil in potential, while the shallow water block has recently been touted as possibly holding up to 72 million barrels of oil.

Onshore it holds interests in two blocks with experienced Perth Basin player Empire Oil & Gas on permits EP480 and EP416, while further to the north it holds a 13% stake in EP437, which stretches from Geraldton to Dongarra.

Its Perth Basin play is to prove up a gas resource it can sell into a domestic market which could lose a fair chunk of supply in 2020 when domestic gas reservation requirements from the North West Shelf LNG suppliers lapses.

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