REG - 88 Energy Limited - Non-Renounceable Rights Issue

88 EnergyAnnouncement

31/07/2023 07:00

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RNS Number : 6443H  88 Energy Limited  31 July 2023

31 July 2023

 

 

This announcement contains inside information

 

Non-Renounceable Rights Issue / Open Offer and Small Holding Share Sale
Facility

 

88 Energy Limited (ASX & AIM: 88E) ("88 Energy" or the "Company") is
pleased to announce the Company's intention to launch a non-renounceable
rights issue to raise up to approximately A$12.00m / £6.29m (the "Offer").

 

Highlights

·     Proposed Offer to be made on the basis of one (1) new share for
every ten (10) shares held by qualifying shareholders as at 4 August 2023 (the
"Record Date")

·     New shares to be issued pursuant to the Offer at A$0.006 / £0.0031
per share

·     Offer to be made available to qualifying shareholders in Australia,
the United Kingdom and New Zealand

·     Designed to allow existing shareholders exposure to potentially
transformational activity over the next 9 months

·     Net proceeds of the Offer intended to be used for(1):

o  Planned flow testing of the Hickory-1 well at Project Phoenix, North Slope
Alaska

o  Planned development wells and work-overs at Project Longhorn, Texas

o  Lease rental payments associated with the Alaskan acreage

o  Ongoing geological and geophysical work associated with the Company's
projects

o  Planning and permitting activities associated with the potential drilling
of a Leonis exploration well at Project Leonis on the North Slope Alaska in
2024 / 2025

o  Additional working capital to cover, inter alia, any cost overruns
associated with the Alaskan and Texas operations

 

Overview

The Company is pleased to announce that it intends to launch the Offer to
enable existing qualifying shareholders to participate in a fundraising of up
to approximately A$12.00m / £6.29m, the net proceeds of which will be used to
fund ongoing activity across its portfolio of oil and gas exploration assets,
located on the North Slope of Alaska and onshore Texas.

 

( )

( )

(1)This is a statement of the Board's current intentions as at the date of
this announcement. However, Shareholders and Depositary Interest Holders
should note that, as with any budget, the allocation of funds may change
depending on a number of factors, including the outcome of operational and
development activities, opportunities for strategic acquisitions, regulatory
developments, market and general economic conditions and environmental
factors. In light of this, the Board reserves the right to alter the way the
funds are applied.

 

The Company's planned activities include the flow testing of the Hickory-1
well, located in Project Phoenix. Multiple hydrocarbon bearing zones were
identified across all pre-drill targets, including the new Upper SFS. The
Hickory-1 well is currently cased and suspended ahead of the upcoming flow
test program which is scheduled to commence as early as possible in the
2023/24 winter operational season. The flow test and well stimulation program
is being developed in consultation with flow test design experts who are
utilising available regional information in combination with a detailed
evaluation of the drilling and wireline logging data from Hickory-1. Program
planning is on schedule and will include rigorous technical and economic
optimisation prior to finalisation. Rig selection and contract negotiation is
expected to be concluded imminently and key long lead items required are being
ordered.

 

The Company is also progressing activities across its portfolio of
conventional projects located on the North Slope of Alaska, which includes a
petrophysical and geophysical assessment of the Company's Project Leonis
acreage, which was awarded in April 2023. The Company is working towards
announcing a maiden prospective resource estimate in Q3/Q4 2023 and plans to
launch a targeted farm-out process to help fund future drilling activity at
Project Leonis in 2024 / 2025.

 

Additionally, the Company will continue to progress development activities at
Project Longhorn, where it is planning to drill two new wells and perform two
workovers to further increase production from this acreage. It is expected
that these activities will take place in the second half of 2023.

 

Details of the Offer

The full details of the Offer will be set out in an Offer Document, which is
expected to be dispatched to all shareholders and lodged with the ASX on or
around 31 July 2023, as per the timetable set out below, and is available on
the Company's website and on the Company's ASX platform (ASX:88E).

 

Qualifying shareholders will be offered the opportunity to acquire fully paid
ordinary shares in the capital of the Company via the Offer. The Offer will be
made on the basis of one (1) new share for every ten (10) shares held by
qualifying shareholders as at the Record Date at an issue price of A$0.006 /
£0.0031 per share ("Offer Price") to raise up to A$12.00m / £6.29m. As at
market close on Friday, 28 July 2023, being the latest practicable date prior
to this announcement, the Offer Price represents a 15% discount to the 15-day
VWAP of A$0.007.

 

Qualifying shareholders will be those shareholders (or depositary interest
holders within CREST) on the register at the Record Date (excluding holders
who have a registered address or who are resident outside of Australia, New
Zealand or the United Kingdom).

 

Qualifying shareholders will also be given the opportunity to apply for
additional shortfall shares beyond their 1 for 10 entitlement. It is the
intention of the Board to allocate additional shortfall shares on a pro-rata
basis calculated using the number of shares held as at the close of the offer
period.

 

In order to maximise the proceeds of the Offer, the Company reserves the right
to place any shortfall shares that are not taken up by existing shareholders
at the discretion of the Directors.

 

Assuming all entitlements are taken up under the Offer (and/or placed, in the
case of any shortfall shares), the Company will issue approximately 2.0
billion new shares, resulting in a total of approximately 22,119 million
shares being on issue.

 

Shareholders in the United Kingdom should note that the Offer is not a rights
issue, as that term is used in the United Kingdom, and is more akin to an open
offer. Rights to subscribe for shares under the offer cannot be traded, and
any surplus shares not applied for will not be sold in the market or placed
for the benefit of shareholders who do not apply under the Offer.

 

The total consideration under the Offer shall be less than, and therefore
cannot exceed, €8 million  (or an equivalent pounds sterling amount) in
aggregate and so, in accordance with Section 85 and Schedule 11A of the United
Kingdom's Financial Services and Markets Act 2000, as amended (FSMA), the
Offer does not require the issue of a prospectus in the United Kingdom for the
purposes of the United Kingdom's Prospectus Regulation Rules (PRR). The Offer
does not constitute an offer to the public requiring an approved prospectus
under section 85 of FSMA and accordingly, neither this announcement, nor the
Offer Document, shall constitute a prospectus for the purposes of the PRR.
This announcement and the Offer Document have not been, and neither it nor the
Offer Document will be, reviewed or approved by the United Kingdom's Financial
Conduct Authority pursuant to sections 85 of FSMA, the London Stock Exchange
or any other authority or regulatory body in the United Kingdom. Accordingly,
neither this announcement nor the Offer Document contain the extent of the
information and disclosures that would typically be included in a UK
prospectus.

 

The communication of this announcement, the Offer Document, and any other
documents, announcements or other materials relating to the Offer, as a
financial promotion has not been approved for the purposes of section 21 of
FSMA and, within the United Kingdom, the Offer is only being made to, and may
only be acted upon by, those persons falling within Article 43 of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as
amended, which includes existing members of 88 Energy Limited. Within the
United Kingdom, any investment or investment activity to which this
announcement, the Offer Document, and any other documents, announcements or
other materials relating to the Offer is available only to such persons and
will be engaged in only with such persons.

 

Indicative Timetable

The proposed timetable for the Offer is set out below. The dates are
indicative only and the Company reserves the right to vary the dates,
including the right to extend the closing date.

 

 Event                                                                           Date*
 Record date for determining holders of less than a marketable parcel            Tuesday, 25 July 2023
 Company Announces Rights Issue and Facility                                     Prior to 10.00am (Sydney time) on Monday, 31 July 2023
 Letters sent to holders of less than a marketable parcel
 Lodgement of Offer Document, Appendix 3B and s708AA Cleansing Notice with ASX
 Ex date on ASX                                                                  Thursday, 3 August 2023
 Record Date for determining Entitlements 7.00pm AEST in respect of Eligible     Friday, 4 August 2023
 Shareholders and 6.00pm (BST) In respect of Eligible Depositary Interest
 Holders
 Offer Document despatched to Eligible Shareholders & Company announces          Wednesday, 9 August 2023
 despatch has been completed
 Entitlements and CREST Excess Entitlements credited to CREST stock accounts of  As soon as practicable after 8.00am (London time) on Wednesday, 9 August 2023
 Eligible Depositary Interest Holders
 Recommended latest time for requesting withdrawal of Entitlements and CREST     4.30pm (London time) on Monday, 14 August 2023
 Excess Entitlements from CREST (to satisfy bona fide market claims only)
 Latest time for depositing Entitlements and CREST Excess Entitlements into      3.00pm (London time) on Tuesday, 15 August 2023
 CREST (to satisfy bona fide market claims only)
 Last day to extend Closing Date of Rights Issue                                 Before noon (Sydney time) Thursday, 17 August 2023
 Closing Date of Rights Issue - AIM**                                            Tuesday, 22 August 2023

 Latest time and date for settlement of CREST application and payment in full
 under the Offer - (1.00pm (BST))
 Closing Date of Rights Issue - ASX**                                            Tuesday, 22 August 2023
 Securities quoted on a deferred settlement basis from market open               Wednesday, 23 August 2023
 Announcement of results of Rights Issue                                         Tuesday, 29 August 2023
 Issue date and lodgement of Appendix 2A with ASX applying for quotation of the  Tuesday, 29 August 2023
 securities (before noon Sydney time)

 Admission to trading on AIM of new shares and dealings in the new shares
 commences 8:00 am (BST)
 CREST member accounts expected to be credited with the new Shares in            As soon as practicable on Tuesday, 29 August 2023
 Depository Interest form
 Closing date for receipt of a Notice of Retention Form                          Monday, 11 September 2023
 Sale of less than marketable parcels and distribution of sales proceeds to      As soon as practicable after the Closing Date for receipt of a Notice of
 relevant shareholders                                                           Retention Form

* These dates are indicative only and are subject to change.

** Subject to the ASX Listing Rules and the AIM Rules, the Directors reserve
the right to extend the Closing Date for the Offer at their discretion. Should
this occur, the extension will have a consequential effect on the anticipated
date of issue for the new Shares.

 

Ashley Gilbert, Managing Director of 88 Energy, commented:

 

"The Company has successfully completed several placements over the last few
years, which has enabled the Company to drill multiple exploration wells with
the potential to unlock significant value for shareholders.  Whilst wells
drilled in 2021 and 2022 failed to deliver on expectations, the drilling of
Hickory-1 in 2023 and planned flow testing of multiple zones in the upcoming
winter season once again provides shareholders with exposure to material
upside on success.

 

During the last 18 months, the Company has acquired its first production asset
and delivered on its planned growth in production, as well as expanding its
Alaskan portfolio with the exciting Project Leonis acreage which is optimally
located on the North Slope of Alaska near TAPS, the Daulton Highway and
near-by fields with significant production. The Company now has a portfolio of
sizeable projects at various stages of the asset life cycle, that we believe
can add substantial value for our shareholders via flow testing, drilling
and/or farm-out transactions.

 

We have received feedback from our shareholders asking to be considered in
future placements and the Board is therefore pleased to provide the
opportunity for eligible shareholders to participate in funding the exciting
opportunities we have planned, in what we believe can be a potentially
transformational period for the Company."

 

Small Holding Share Sale Facility

 

88E is also pleased to announce that it has established a Small Holding Sale
Facility (Facility) for holders of "Less than Marketable Parcels" of the
Company's shares.

 

The Company is providing the Facility to allow smaller shareholders the
opportunity to sell their shares without having to use a broker or pay
brokerage fees.

 

The Company values all of its shareholders; however, it incurs significant
administration costs maintaining such a large number of Less than Marketable
Parcels. By facilitating this sale, the Company hopes to significantly reduce
the administrative costs associated with maintaining a large number of very
small holdings.

 

The ASX Listing Rules define a Less than Marketable Parcel as those with a
market value of less than A$500. As at 5:00pm (AWST) on 25 July 2023 (Facility
Record Date), a Less than Marketable Parcel of shares is a holding comprised
of 71,428 or fewer shares, based on the Company's closing share price of
$0.007 on the Facility Record Date.

 

The Company has approximately 19,793 shareholders of which approximately 8,847
hold a Less than Marketable Parcel (Minority Members). These shareholders in
aggregate represent approximately 1.32% of all issued shares.

 

If Minority Members wish to sell their shares through this facility, they do
not have to take any action. If Minority Members do not wish to sell their
shares through this facility, they must complete and return the Notice of
Retention Form to the Company's share registry, Computershare by 5.00pm (AWST)
on 11 September 2023.

 

The Facility is not available to those shareholders who are residents of the
United Kingdom, and it is not available to persons who hold an interest in the
Company's shares via depositary interests in CREST.

 

A copy of the letter and the Notice of Retention that is currently being
prepared by the Company will be released to ASX and mailed to eligible
Minority Members by no later than 31 July 2023. If you have any queries,
please contact Computershare on 1300 850 505 (within Australia) and +613 9415
4000 (outside Australia) between the hours of 8:30 AM to 5:00 PM (AEST) Monday
to Friday.

 

Euroz Hartleys Limited has been appointed as broker for shares sold under the
Facility. Following the disposal of Less than Marketable Parcel shares, the
cash proceeds of each sale shall be forwarded to Minority Members whose shares
have been sold as soon as possible. The Company will pay the transaction costs
of shareholders who use the Facility to sell their shares, excluding tax
consequences from the sale which remain the shareholder's responsibility.

 

Indicative timetable

 

The indicative key dates for the Small Holding Sale Facility are outlined
below.

 Event                                                    Date
 Record Date for the Facility                             5.00pm (AWST) on Tuesday, 25 July 2023
 Announcement to ASX Sale Facility                        Monday, 31 July 2023
 Letters sent to holders of Less than Marketable Parcels  Monday, 31 July 2023
 Closing Date for receipt of Share Retention Forms        5.00pm (AWST) on Monday, 11 September 2023

 

 

Yours faithfully

 

 

Ashley Gilbert

Managing Director

88 Energy Ltd

 

 

This announcement has been authorised by the Board.

 

 

Media and Investor Relations:

 

 88 Energy Ltd

 Ashley Gilbert, Managing Director
 Tel: +61 8 9485 0990

 Email: investor-relations@88energy.com

 Fivemark Partners, Investor and Media Relations
 Michael Vaughan                                  Tel: +61 422 602 720

 EurozHartleys Ltd
 Dale Bryan                                       Tel: + 61 8 9268 2829

 Cenkos Securities Plc                            Tel: +44 (0)20 7397 8900
 Derrick Lee                                      Tel: +44 (0)131 220 6939
 Pearl Kellie                                     Tel: +44 (0)131 220 9775

 

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