Europa Oil & Gas (AIM: EOG) has conditionally raised £1 million through an institutional placing via its broker Astaire Securities. The company will issue 7.1 million new ordinary shares at 14 pence each. The company said that the proceeds will be utilised for UK production enhancement work and the forthcoming Voitinel test.
“This modest fundraising will support our ongoing production and appraisal work in the UK and Romania. The directors took the prudent decision to bolster the balance sheet in order to ensure the production work continues apace in a rising oil price environment”, Europa MD Paul Barrett commented. “In addition, work will continue on maturing the company's Contingent resource base. The future value of these activities is anticipated to far outweigh today's minor dilution to shareholders”.
The placing shares represent 8.7% of the enlarged issued share capital, and Europa expect the share to be admitted to trading on London’ AIM market by 4 May 2010, with 3.8 million shares initially admitted on the 26 April 2010.
Additionally, under the placing agreement, Astaire has been issued options to subscribe for 357,142 ordinary shares, which are exercisable at 14p and expire on 26 April 2012.
In the UK, Europa plans to undertake production enhancement work in April, with a view to significantly increase well productivity. Production enhancement will include work at West Firsby and work-over of the Crosby Warren-2 well.
Also in the UK, Europa drilled the Hykeham-1 exploration well in November, which encountered a four metre oil-bearing sand, and the well was cased ready for perforating and an extended well test.
In March Europa confirmed that the original perforation of Hykeham-1 failed to penetrate Hykeham-1’s well casing. Subsequently, Hykeham-1 has been re-perforated, installed a pump to lift the well, and shut-in - whilst testing data is analysed alongside previously gathered wireline log and geological data.
Europa reiterated, after reporting some inconsistent test data, it believes that the Hykeham reservoir is oil-bearing and, given the right completion conditions, the reservoir will flow.
In Romania, at the Voitinel-1 well in the EIII-1 Exploration Area of the Brodina Block, Europa (28.75%) and its joint venture partners - Aurelian Oil & Gas (AIM: AUL) with 33.75% and S.N.G.N. Romgaz S.A. holding 37.50% - have hired Schlumberger (NYSE: SLB) to undertake a proppant frac stimulation.
“We are looking forward to the results of the stimulation programme, which will provide us with valuable information on this significant gas discovery”, Paul Barrett stated previously.
Upon initial un-stimulated testing, the `1650 sand' interval flowed dry gas at rates of up to 3 million standard cubic feet per day (mmscfpd). According to Europa, current estimates for gas-in-place for the Voitinel play, on-block, are up to 400 billion cubic feet (bcf). Europa's working interest is 28.75%, equivalent to approximately 15 million barrels of oil (mmbo).
Europa expect that the programme will take place during May, and following the frac treatment and a short flow test, the well will be shut-in for pressure build-up for 14 days. After this period the additional potential of Voitinel-1’s `1400 sand' will be tested.