North Sea junior Independent Oil & Gas (LON:IOG) shares advanced in early trading after it revealed a number of key details about a proposed funding deal.
Negotiations are ongoing for the major financing, which would enable several oil field developments, and the company is now arranging a shareholder meeting to expand management authorities so that a deal can proceed quickly once final agreements are made.
IOG said in a statement it would be “extremely advantageous” to have shareholder authorities in place so it can conclude negotiations and receive funds by July 31.
The funding partner has been described as an “internationally listed group with a multi-billion dollar market capitalisation.”
IOG today told investors that the long term financing will comprise both debt and equity.
A share sale could take place before the end of July, and would see the new funding partner take up to 29.9% of the group. It is expected that the new partner would acquire just over 30mln shares at a premium price of 23.79p, and that would raise £7.1mln for IOG.
At that price the placing would be a 58% premium to Tuesday’s closing share price, though it is in line with smaller recently agreed share placings.
Debt financing arrangements would then follow around two months later; this element is likely to be in two parts, with the first allotment of funds made available to IOG upon completion.
The first tranche of debt would allow the company to proceed with a drill programme for up to three wells, including commitment wells on the Cronx and Skipper fields.
IOG added that it is already in talks to potentially contract a semi-submersible drilling rig, for mid-2016.
The company did, however, warn that: “It should be noted that the funding is subject to negotiation and the approval of various counter-parties and IOG and that there can be no guarantee that IOG will secure such financing.”
In early deals on AIM, shares in IOG advanced 2.5p, 16.6%, to trade at 17.5p.