The independent oil and gas company, with assets offshore the Falkland Islands, raised £2m before expenses to continue developing its 100% held Darwin gas condensate discovery. (This is gas that is deep down than turns into a lighter liquid than crude as it surfaces).
The Fundraising was a direct placing to a single investor at 11.5p with 8.7m two-year warrants with a 20p exercise price. The ultra-high-net-worth Middle Eastern investor is reported to be exceptionally well-connected. The funds are for the Company’s Licence fees, Discovery Area fees, technical and commercial studies, general & administrative expenses and, more generally, to continue to advance the Company’s Darwin discovery for commercial appraisal.
The Interims to June 26 reported a loss of $0.726m with $0.441m cash, although a number of warrants had been exercised at 10p. The Company has acquired 2,517 square kilometres of 3D seismic and drilled two exploration wells, making a significant gas condensate discovery with its first well.
The CEO said this is potentially a major discovery, with 462 MM bbls (P50) of recoverable liquid and strong exploration upside.
Comment: It seems reasonable exploration upside is already priced in. The further cost of a well development could also be huge and the shareholder list has been short of institutional investors able to follow their money. Speculative buy but set a low-price target.