TIDMPTR
RNS Number : 5903W
Petroneft Resources PLC
12 December 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR
JAPAN.
PetroNeft Resources plc ("PetroNeft" or the "Company")
US$2.12 million Placing
Corporate Update
Director Appointment
PetroNeft (AIM: PTR), the 50% owner and operator of Licences 61
and 67, Tomsk Oblast, Russian Federation, is pleased to announce a
conditional placing of 107,755,037 shares at a price of 1.5p.
Highlights:
-- Gross proceeds of US$2.12 million raised at GBP0.015 per
share in a placing with institutional and other investors, a
premium of approximately 58%
-- Money raised will primarily be used to fund the 2020 capital investment program
-- Significant commitment from directors, supporting 44% of the placing
-- Petrogrand Loan which was scheduled to expire on 15(th)
December 2019 has been extended for one year with a potential
further year extension to 15(th) December 2021 if certain
milestones are met.
-- EGM to held in Dublin on 7(th) January to approve capital raise.
PLACING
PetroNeft has agreed the terms of a conditional placing of
107,755,037 new Ordinary Shares at GBP0.015 (EUR0.0178) per
Ordinary Share (the "Placing Shares"). The placing will raise new
capital of US$1.6 million and in addition 26,985,227 of the placed
shares will be used to settle outstanding salary to senior
management and Board Director Fees.
The Placing consists of 107,755,037 Shares at a price of
GBP0.015 each, conditional upon receiving shareholder approval of
Resolution 1 at the Extraordinary General Meeting ("EGM") of the
Company which will be held on 7 January 2020, on Admission and the
terms of the subscription letters entered into with the Placees.
Application for Admission in respect of the Placing Shares will be
made to both the London Stock Exchange and Euronext Dublin and,
subject to the passing, without amendment, of Resolution 1 at the
EGM, it is expected that Admission will become effective and that
dealings in the Placing Shares will commence on AIM and Euronext
Growth at 8.00 a.m. on 9 January 2020.
Following Admission, the Company's total issued share capital
consists of 828,885,530 Ordinary Shares of EUR0.01 each. The
Company does not hold any Ordinary Shares in treasury. This figure
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 a change to their interest in PetroNeft under the
Transparency (Directive 2004/109/EC) Regulations 2007 and the
Transparency Rules.
The Placing Price represents a premium of approximately 58 per
cent to the closing price of GBP0.0095 per Ordinary Share on 11
December 2019, being the latest practicable date on which the
Company's shares traded on AIM and Euronext Growth ahead of the
announcement of the Placing. Following their issue, the Placing
Shares will represent approximately 13 per cent of the Enlarged
Issued Share Capital.
An EGM Circular and Notice of EGM will be posted to Shareholders
on 13 December 2019 and be made available on www.petroneft.com on
the same day. The EGM will be held in at the Clayton Hotel,
Ballsbridge, Dublin 4, Ireland at 11.00 AM on Tuesday 7 January
2020.
DIRECTORS' AND MANAGEMENT PARTICIPATION IN THE PLACING
Certain Directors and management of PetroNeft will subscribe for
the following Placing Shares:
Placing Shares Resulting % of Enlarged
Directors: subscribed holding of Share Capital
for Ordinary Shares
Maxim Korobov 32,218,756 240,648,214 29.03
--------------- ----------------- ---------------
David Sturt 12,463,476 16,511,481 1.99
--------------- ----------------- ---------------
Tom Hickey 2,977,341 5,203,624 0.63
--------------- ----------------- ---------------
Senior management:
--------------- ----------------- ---------------
Pavel Tetyakov 12,444,530 12,444,530 1.50
--------------- ----------------- ---------------
The participation of Maxim Korobov, David Sturt and Tom Hickey
constitutes a related party transaction in accordance with AIM and
Euronext Growth Rule 13. Accordingly, David Golder and Anthony
Sacca, acting as the independent Directors, consider, having
consulted with the Company's Nominated Adviser and Euronext Growth
Advisor, that the terms of the participation in the Placing is fair
and reasonable insofar as the Company's shareholders are
concerned.
PLACING
This placing will involve 107,755,037 new Ordinary Shares at a
price of GBP0.015 per share. The placing of these shares will raise
approximately $1.6 million (before expenses). In addition
26,985,227 of these new shares will be issued as settlement of
outstanding salaries and fees due to be paid by the Company. The
net proceeds of the Placing will be used to carry out the 2020
capital investment program as well as providing additional
financial support for ongoing PetroNeft operational costs. The
funds from this placing will allow management to follow their
clearly delineated strategy of increasing the value of the
company's assets through low cost but high reward projects, while
seeking a buyer for one or both licences over the next 2 years.
CAPITAL INVESTMENT PROGRAM
The Board has stated a clear strategy of seeking to unlock the
value of our assets, either through a sale of one or more licences
or through further development of the licences through low cost
operational and exploration activity. The 2020 capital program is
aimed at a combination of reducing ongoing operational costs,
increasing production, cash flow and reserves leading in increased
asset value
LICENCE 61
Operational costs will be reduced through installation of a mini
oil processing unit which will enable produced oil to be refined to
fuel to be used in the field. This project has a payback period of
less than one year and is expected to reduce operating costs by at
least a $1/bbl.
To increase production, a pipeline will be constructed to link
the Sibkrayevskoye field to the Central Processing Unit which will
ensure year-round production from the field. Currently the field is
produced only when winter roads are in place, which usually enables
200 - 250 bopd to be trucked for approximately three months.
Construction of this pipeline will ensure year-round production,
and at the same time provide crucial reservoir performance data
which will de-risk further development of the field.
To increase reserves, the Company will seek to re-enter the
Emtorskaya-300 well drilled in 1971 on the Emtorskaya prospect.
This is a significant (106km(2)) structural closure up dip from the
Lineynoye field, where re-interpretation of the well log data has
identified potential oil within the Upper Jurassic zones. A
successful re-entry and testing of oil from this well would de-risk
the whole of the Emtorskaya prospect. The age of the well may cause
issues when re-entering, but a successful re-entry will save the
significant cost of a new exploration well.
LICENCE 67
Following the successful drilling and testing of the C-4 well on
the Cheremshanskoye field in 2018, the Company plans to re-enter
this well and also the earlier drilled (2011) C-3 well to bring the
Cheremshanskoye field into production through 2020. Initial
production data from these two wells will be used to plan forward
development of the field. State Reserves of 19.26 mmbbls C1 + C2
(approximate 2P) were approved in early 2019.
In addition to Cheremshanskoye, the plan also includes
re-entering two wells (L-2 & L-2a) on the Ledovoye field to
test both Jurassic and overlying Cretaceous reservoirs. Oil was
encountered in both wells when initially drilled. On successful
re-entry of these wells, they will be tested for three months.
Whilst testing is ongoing, the company will expedite approval of
state reserves which when granted will enable year-round
production. These wells are located right beside an all season road
which optimises potential sales routes for the oil.
NON-EXECUTIVE DIRECTOR APPOINTMENT
As part of the Company's desire to improve the strength and
diversity of the Board, the Board has voted to bring on Daria
Shaftelskaya as a non-executive director on successful passing of
the EGM resolutions. Daria, age 41, will be a welcome addition to
the board, having a strong finance background in addition to being
from the Tomsk region.
Ms. Shaftelskaya will subscribe for 10,000,000 shares in the
placing which will take her holding to 88,079,986 Ordinary Shares
representing 10.7%of the Enlarged Share Capital.
There are no other matters which are required to be announced
pursuant to paragraph (g) of Schedule 2 to the AIM and Euronext
Growth Rules
PETROGRAND LOAN FACILITY
The company entered into a $2.0M loan facility with Petrogrand
on 16(th) January 2018, this facility was increased to $2.5M on 14
February 2019 and was due for repayment in full on 15(th) December
2019. The company has successfully negotiated a one year extension
to the loan with an additional potential second year extension if
20% of the capital is repaid by 15(th) December 2020. If the
conditions on the second one year extension are met, then the
interest rate will reduce from LIBOR + 9% to LIBOR +6% in December
2020.
The terms of the extension agreement are conditional upon
receiving shareholder approval of Resolution 1 at the Extraordinary
General Meeting of the Company.
Due to Petrogrand being an associate (as defined in the AIM and
Euronext Growth Rules) of Mr Maxim Korobov, a PetroNeft director,
the loan facility is considered to be a related party transaction
under the AIM and Euronext Growth Rules. The directors of the
Company, other than Maxim Korobov, having consulted the Company's
nominated adviser and Euronext Growth advisor, consider the terms
of the extension of the loan facility to be fair and reasonable
insofar as the Company's shareholders are concerned.
Dave Golder, Chairman of PetroNeft Resources plc commented:
"We are very pleased with the outcome of the Placing, especially
as we successfully managed to place at a 58% premium to the
prevailing share price; this shows great confidence and support for
the company. In addition it is also very encouraging that we have
managed to negotiate a loan extension with Petrogrand that enhances
our financial flexibility and enables to invest in the ongoing
improvement of our resource base and long term asset value."
For further information, contact:
David Sturt, CEO, PetroNeft Resources plc +353 1 443 3720
John Frain/Gillian O'Driscoll, Davy (NOMAD,
Euronext Growth Advisor and Broker) +353 1 679 6363
Joe Heron, Murray Consultants +353 1 87 6909735
The information contained in this announcement has been reviewed
and verified by Mr. David Sturt, Chief Executive Officer and
Executive Director of PetroNeft, for the purposes of the Guidance
Note for Mining and Oil & Gas Companies issued by the London
Stock Exchange in June 2009. Mr. Sturt holds a B.Sc. Degree in
Earth Sciences from Kingston University and an MSc. in Exploration
Geophysics from The University of Leeds. He is a member of the
Petroleum Exploration Society Great Britain and has over 35 years'
experience in oil and gas exploration and development.
Forward Looking Statements
This announcement contains forward-looking statements. These
statements relate to the Company's future prospects, developments
and business strategies. Forward-looking statements are identified
by their use of terms and phrases such as 'believe', 'could',
'envisage', 'potential', 'estimate', 'expect', 'may', 'will' or the
negative of those, variations or comparable expressions, including
references to assumptions.
The forward-looking statements in this announcement are based on
current expectations and are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by those statements. These forward-looking
statements speak only as at the date of this announcement.
Glossary
bbls Barrels
bopd Barrels of oil per day
------------------------------------------------------
mmbbls Million barrels
------------------------------------------------------
C1 + C2 Russian State Reserves C1 + C2, equivalent
to 2P (Proven and Probable)
------------------------------------------------------
2P Proven and Probable reserves under the Society
of Petroleum Engineers Petroleum Reserves Management
System
------------------------------------------------------
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END
MSCKFLFFKLFZFBD
(END) Dow Jones Newswires
December 12, 2019 02:01 ET (07:01 GMT)
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