REG - 88 Energy Limited - Successful Placement To Raise A$9.9M

88 EnergyAnnouncement

29/11/2023 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231129:nRSc0479Va&default-theme=true

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 (£0.0023 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. £5.16 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 (£0.0023) 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 £0.0039. 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 £0.0039 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

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCFEASMUEDSEIF