Bahamas Petroleum Company (AIM:BPC) saw its shares lose the gains it earned the previous week, as its placing of 475 million new ordinary shares diluted the price.
The company noted that the share placing had been a success, with £9.5 million being raised through shares issued at a price of 2.00p apiece.
Bahamas Petroleum stated that the proceeds from the placing would enhance its funding capacity, and would help cover the costs of its Perseverance #1 well. Which, as we previously reported, is set to by spud before the end of the year, with a resource target of 0.77 billion barrels of oil.
The company added that its rational for the recent placing was its continuing effort to optimise its funding strategy, with a push towards lowering the cost of capital, along with less aggregate dilution and greater certainty.
Based on the placing proceeds, existing cash balance, and conditional convertible notes, the company said that it doesn’t expect it will have to draw further on its previously announced £16 million zero-coupon, second ranking convertible bond facility – unless changes occur to the cost of Perseverance #1.
Investor notes
Speaking on the company’s drive to have the sufficient funds necessary to fulfil its technical objectives, Group CEO, Simon Potter, commented:
“Today’s placing is another milestone in the implementation of that funding strategy. The placing proceeds, being certain, immediately available and at a known dilution compared to other existing funding options, give us the opportunity to simplify the capital structure of the business whilst leaving us in a much stronger overall financial position. With the success of the placing we are also able to materially reduce the need to rely on other previously announced financing instruments, without affecting our overall ability to proceed with Perseverance #1 or other aspects of our recently enlarged business.”
“At the same time, with a view to continually seeking to strategically enhance the overall financial and operating capacity of the Company, we continue to consider a wide range of other funding options. Many of these are newly available to us consequent on the broadening of our asset base in recent months.”
Investor notes
Following the placing, Bahamas petroleum shares dipped by 20.98% or 0.59p, to 2.21p apiece 01/10/20 12:00 GMT. This is up from its yearly nadir of 1.20p in March, but far short of its recent high of 3.53p in June.
The company currently has a p/e ratio of -9.33, and was given a 55.65% ‘Underperform’ rating by Marketbeat‘s community.