TIDM88E
RNS Number : 0479V
88 Energy Limited
29 November 2023
This announcement contains inside information
29 November 2023
88 Energy Limited
SUCCESSFUL PLACEMENT TO RAISE A$9.9M
Highlights
-- Successful oversubscribed share placement to raise A$9.9
million (before costs) to domestic and international institutional
and sophisticated investors
-- Issue price of A$0.0045 per share (GBP0.0023 per share),
including 1 option/warrant for every 3 placement shares issued
-- Company is now fully funded for the upcoming Hickory-1 flow
test program, including contingencies to cover financial exposure
relating to the financial position of the Project Phoenix Joint
Venture partner
-- Funds from the placement will also be directed towards
initial exploration activities in Namibia
-- 88 Energy is now focused on delivering the successful flow
testing of multiple reservoirs at the Hickory-1 well in Q1 2024
88 Energy Limited (ASX:88E, AIM:88E, OTC:EEENF) ( 88 Energy or
the Company ) is pleased to advise that it has successfully
completed a bookbuild to domestic and international institutional
and sophisticated investors to raise A$9.9 million (approx. GBP5.16
million) before costs (the Placement ). The Placement will involve
the issue of 2,200,000,005 new fully paid ordinary shares in the
Company (the New Ordinary Shares ) at an issue price of A$0.0045
(GBP0.0023) per New Ordinary Share) (the Issue Price ).
In addition, the Company will issue options on a 1 for 3 basis
for shares subscribed for in the Placement to ASX investors (
Options ) with the Company intending on listing the Options on the
ASX, subject to certain conditions. The Options are exercisable at
A$0.0075 per share and expire three years from the date of issue.
Investors participating in the Placement in the UK will receive 1
warrant for every 3 shares subscribed for ( Warrants ), with an
exercise price of GBP0.0039. The Warrants are unlisted and can be
exercised at any time before 15 December 2026.
The net proceeds of the Placement, together with the Company's
existing cash reserves (A$9.4 million as at 31 October 2023,
unaudited), will be used to fund:
-- upcoming flow testing operations at the Project Phoenix
Hickory-1 well (North Slope, Alaska; 88E existing 75% net working
interest);
-- initial farm-in exploration activities at the Company's
recently acquired Owambo Basin acreage in Namibia; and
-- contingencies and additional working capital.
The Hickory-1 flow test planning and permitting remains on track
for program operations during Q1 2024. Following declaration of a
maiden 2C Contingent Resource estimate for the BFF reservoir of 157
MMBOE(1,3) , the program is set to focus on flow testing the
shallower SMD-B and SFS reservoirs. The SMD-B and SFS reservoirs
have been successfully flow tested by Pantheon Resources in the
northern adjacent acreage and are targeting a multi-million barrel
net mean prospective resource(1,2) .
The Placement enables 88 Energy to undertake the Hickory-1 flow
test despite the potential failure of its Project Phoenix JV
partner, Burgundy Xploration, LLC ( Burgundy ), to meet ongoing
obligations and cure its payment defaults by the requisite deadline
of 30 November 2023 (refer 88 Energy ASX release dated 31 October
2023). Burgundy has informed the Company that it is continuing to
finalise its fund raising program and will work with 88 Energy to
cure the default, however at this time 88 Energy has made the
decision to complete the Placement to secure funding arrangements
for the flow test in the absence of certainty of Burgundy's ability
to finance its share of the Hickory-1 activities. 88 Energy
maintains its rights under the Joint Operating Agreement, including
exercising the option to require Burgundy to relinquish its working
interests in the Project and Joint Venture.
88 Energy Managing Director and CEO, Ashley Gilbert,
commented:
"We are now fully funded to undertake Hickory-1 flow test
operations during the upcoming winter operational season in Alaska.
Burgundy's failure to rectify its payment default to date is
disappointing and has necessitated the raising of additional funds.
However, if not cured their default will enable us to exercise
remedies under the JOA which may include the potential for 88
Energy to move to a 100% working interest in some or all of the
leases within Projects Phoenix and Icewine West covered under the
default.
We are also excited about commencing initial exploration
activity on our Namibian farm-in acreage. The Owambo Basin delivers
large-scale hydrocarbon exploration potential across a highly
prospective and underexplored acreage position."
Placement details
The issue of the 2,200,000,005 New Ordinary Shares and a total
of 733,333,332 associated Options/Warrants fall within the
Company's placement capacity pursuant to ASX Listing Rules 7.1 and
7.1A and is not subject to shareholder approval:
-- 916,622,618 New Ordinary Shares and a total of 733,333,332
Options/Warrants will be issued under the Company's available
placement capacity pursuant to Listing Rule 7.1; and
-- 1,283,377,387 New Ordinary Shares will be issued under the
Company's available placement capacity pursuant to Listing Rule
7.1A.
The New Ordinary Shares will rank pari passu with the existing
ordinary shares in the Company, with settlement on ASX scheduled
for 7 December 2023. Application has been made for the New Ordinary
Shares to be admitted to trading on AIM (Admission), with Admission
expected to occur at 8.00am on 8 December 2023.
Following the issue of the New Ordinary Shares, the Company will
have 24,318,655,048 ordinary shares on issue, all of which have
voting rights. The figure of 24,318,655,048 ordinary shares may be
used by shareholders as the denominator for the calculations by
which they will determine if they are required to notify their
interest in, or change their interest in, the Company.
The Issue Price represents a 18.2% discount to the closing price
of A$0.0055 on 27 November 2023 and a 23.6% discount to the ASX
VWAP for the ten trading days prior to 28 November 2023.
The attaching Options will be exercisable at A$0.0075, each with
an expiry date three years from issue.
The Company intends to apply for quotation of the Options on the
ASX (but not on AIM), subject to meeting ASX minimum listing
requirements.
Instead of attaching Options, investors in the UK Placement will
be granted Warrants on materially the same terms as the Options.
The warrants will be unlisted and have a Sterling exercise price of
GBP GBP0.0039 and expiry on 15 December 2026 .
Euroz Hartleys Limited acted as Sole Lead Manager and Bookrunner
to the Placement. Cavendish Capital Markets Ltd acted as Nominated
Adviser and Sole Broker to the Placement in the United Kingdom.
Inyati Capital Pty Ltd acted as Co-Manager to the Placement.
Commission for the Placement was 6% (plus GST) of total funds
raised across Euroz Hartleys Limited, Inyati Capital Pty Ltd and
Cavendish Capital Market Ltd. In addition and subject to
shareholder approval, the Company will issue a total of 75,000,000
Options or Warrants (collectively) to the managers of the Placement
(on the same terms as the ASX Options and UK Warrants).
JV partner update
As previously reported, the Company's 100%-owned subsidiary
Accumulate Energy Alaska, Inc (88E-Accumulate) entered into a
standstill and option agreement with its Project Phoenix JV
partner, Burgundy. The agreement provided Burgundy additional time
to raise funds to pay its outstanding cash calls by 31 October
2023.
On 31 October 2023, 88E-Accumulate issued Burgundy with a
default notice under the JOA in respect of its outstanding cash
calls for the 2023 work program and budget including acreage lease
payments and share of costs associated with the Hickory-1 well that
was completed in Q1 CY2023 (Cash Calls). Burgundy could cure its
payment defaults under the JOA if 88E-Accumulate received payment
in full of the cash call amount totalling US$3.4 million within 30
days.
Whilst Burgundy continues to support the progression of the
upcoming Hickory-1 flow test program, it has failed to make this
payment by the requisite default notice deadline of 30 November
2023 .
As a result, 88E-Accumulate now intends to exercise some or all
of the remedies available under the JOA. Remedies include
88E-Accumulate having the right to require that Burgundy completely
withdraw from the JOA and assign all of its participating interest
in the relevant leases to 88E-Accumulate. This may result in 88
Energy holding a 100% working interest in some or all of the leases
covered under the default within Project Phoenix and Project
Icewine West. Any additional working interest secured under the
default process could create greater flexibility around any
possible future farm-out arrangement.
88 Energy remains committed to the upcoming Hickory-1 flow test
program and has undertaken the Placement to ensure it is
sufficiently funded to proceed with the program.
Pursuant to the requirements of the ASX Listing Rules Chapter 5
and the AIM Rules for Companies, the technical information and
resource reporting contained in this announcement was prepared by,
or under the supervision of, Dr Stephen Staley, who is a
Non-Executive Director of the Company. Dr Staley has more than 40
years' experience in the petroleum industry, is a Fellow of the
Geological Society of London, and a qualified
Geologist/Geophysicist who has sufficient experience that is
relevant to the style and nature of the oil prospects under
consideration and to the activities discussed in this document.
Dr Staley has reviewed the information and supporting
documentation referred to in this announcement and considers the
resource and reserve estimates to be fairly represented and
consents to its release in the form and context in which it
appears. His academic qualifications and industry memberships
appear on the Company's website and both comply with the criteria
for "Competence" under clause 3.1 of the Valmin Code 2015.
Terminology and standards adopted by the Society of Petroleum
Engineers "Petroleum Resources Management System" have been applied
in producing this document.
This announcement has been authorised by the Board.
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 (0)8 9485 0990
Email: investor-relations@88energy.com
Fivemark Partners, Investor and Media Relations
Michael Vaughan Tel: +61 (0)422 602 720
EurozHartleys Ltd
Dale Bryan Tel: +61 (0)8 9268 2829
Cavendish Capital Markets
Limited
Derrick Lee Tel: +44 (0)131 220 6939 / +44
(0)20 7397 8900
Pearl Kellie
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END
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November 29, 2023 02:03 ET (07:03 GMT)
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