President Energy's (LON:PCC) successful £30.7 million fundraise means it is well financed going into a potentially 'company making' drill campaign in Paraguay this year, says chief executive John Hamilton.
The junior oil group brought in the cash through a package which included a placing and an open offer cash call, and the placing - the results of which was announced yesterday - was oversubscribed.
The World Bank's IFC also cornerstoned the offering, having agreed to invest £15 million into the company last September - demonstrating the draw of the Paraguay opportunity.
Hamilton explained to Proactive how the cash call provided financial security, now that the three well programme (on three separate targets) has become "more complex" than previously.
That's because the firm has been uncovering potentially deeper structures beneath the cretaceous rift basin at the massive 34,000 sq km licence area.
"The seismic is lighting up these Paleozoic structures across this huge acreage that we now control and that's really excited us. We had always intended on drilling three wells here but they were three cretaceous wells down to a certain depth targeting what we hoped to be oil accumulations.
"What we are seeing now are multiple stack pay possibilities and at least two of the three wells will require deeper drilling, different well designs," he said.
"Rather than string together a little bit of money and drill a first well and hit and hope, it (the fundraise) was really about trying to make sure for our shareholders that were entering this campaign with sufficient funding to make sure we saw it through."
And after the numbers from a recent independent audit, it's no surprise the market is eager to see the first well spud.
An independent audit has estimated the Jacaranda, Jurumi and Yacare targets at the Pirity basin contain together a gross mean, unrisked prospective resource of just under 1.1bn barrels of oil equivalent.
That’s just over 647mln barrels net to President, which has around 59% of the Pirity and Demattei concessions, where the prospects lie.
The largest - Jacaranda - which straddles the two concessions, and the first to be spudded, in May this year is estimated to contain a net 370mln barrels unrisked to President.
Notably, on that unrisked basis, this one opportunity alone is worth more than US$6bn, or US$1bn risked.
Hamilton explains how for President any success in Paraguay will have a "material" impact on the group.
Finalising a rig contract is now at an advanced stage and the May spud date is still on track, said Hamilton, who added that oil services specialist Schlumberger will oversee drilling and project management.
The Pirity basin is very remote and it would take five hours to drive across the area, notes Hamilton, so much of the oil services required in country is simply not there.
President shares dipped on Thursday following the placing but have charted steady momentum over recent months - rising around 130% since August last year.
The firm's move into Paraguay has already focused oil investors attention back on the South American country, where just two wells have been sunk in the last 25 years.
Broker Canaccord last October pointed out that President's licences were on trend with, and close to, producing fields in Argentina.
“A rare combination of frontier-scale but relatively low risk exploration potential, together with an attractive tax regime (10% profit tax), and a new more pro-business environment, have put Paraguay back on the exploration map,” it said in a note.
On Friday, details of the firm's open offer to existing shareholders were announced.
It is made at 35p a share, the same as the placing price, on a one new share for every 26 held basis.