Shares in Savannah Petroleum PLC (LON:SAVP) shot up as it told investors it had successfully brought in US$40mln in an over-subscribed placing to help it develop its promising oil assets in Niger and as trading in its shares was restored.
More than 79.8mln shares were issued at 38p each in the cash call.
Andrew Knott, chief executive, said today: "This fund raise was oversubscribed and has been extremely well supported by both existing and new shareholders who we thank, as well as by the management team.
A strong endorsement of strategy
"This is a strong endorsement of our strategy and ensures we are funded to move the assets to the next level of value creation.
"From here we can now look forward to the imminent recommencement of ground operations with the 3D seismic programme at R3, which will in turn help us maximize the chances of a successful drilling campaign in 2017. This is an extremely exciting time in the Savannah story and we look forward to providing further updates in the weeks ahead."
Shares rose almost 41% to 33.25p making it the top London share riser.
The group acquired the first of its blocks in July 2013 when the China National Petroleum Company (CNPC) mandatorily relinquished a 50% stake.
Last July, the group acquired the R3/R4 contract area too, which added 29 new leads and expanded the company’s acreage position so it now spans about 50% of the Agadem Rift Basin.
Savannah expects to follow up the work with a multi-well 3D seismic-backed exploration drilling campaign in the first quarter of next year.
A unique company for its size
Knott told a recent interview that there were several characteristics of its asset base, which make it a unique company for its size.
"It's very large. We've had independent estimates of the risk prospective resource base to be 2.2bn barrels. The area we have under licence from an acreage perspective is greater than half the size of Wales," he noted.
In January this year, trading in Savannah shares were suspended at the request of the company pending a potential reverse takeover transaction.
Today, it confirmed all discussions have now stopped and the focus is on its existing assets. Trading start again at 7.30am on July 8.
Broker Mirabaud said the group was 'cashed up and drill ready' after raising money at a 61% premium.
"We view the financing as a strong vote of confidence in the Niger-focused explorer and its Agadem basin blocks, providing the funds to acquire a new 3D seismic survey and drill 4 to 6 low-risk exploration wells, starting in Q1 2017.
"In parallel, SAVP continues in advanced farm-out talks and hopes to secure a deal before year-end. It is envisaged that the introduction of a partner would involve a major capital injection and further acceleration of exploration drilling activities.
With the shares likely to run-up ahead of drilling in six months’ time, the broker repeated a 'buy' stance and 125p a share target price.