Carnarvon Petroleum (ASX: CVN) is raising up to A$20 million to participate in the focused development plan put forward by the new operator of its Thailand assets.
Proceeds from the share placement to sophisticated and professional investors as well as the Share Purchase Plan will fund the drilling of 12 new wells, 15 workover, fracture network studies and water flooding studies in the L44/43 and L33/43 concessions.
Funds will also be used for the acquisition of 100 square kilometres of 3D seismic to enhance the prospectivity of mapped leads into 70 to 80 drilling locations and general working capital.
The share placement aims to raise up to A$15 million through the issue of about 182.9 million new shares priced at A$0.082 each.
Macquarie Capital (Australia) Limited and Hartleys Limited are joint lead managers and bookrunners to the placement.
The placement has been split into an unconditional tranche of about 102.9 million shares to raise A$8.4 million and a conditional trance of about 80 million shares to raise A$6.6 million, the latter of which is subject to approval from Carnarvon shareholders at the company’s shareholder meeting to be held on 19 November 2012.
Carnarvon will raise the remaining A$5 million through a Share Purchase Plan allowing eligible shareholders to purchase up to A$15,000 in new shares priced at A$0.082 each.
Thailand development
The entry of ECO Environmental Investments (ECO), which acquired three onshore Thailand concessions from Pan Orient Energy’s (TSX: POE), has led to the development of a new plan to maximise the value of these assets.
This targets up to 30 million barrels of proved and probable reserves as well as 125 million barrels of prospective resources within the 365 square kilometre area covered by existing 3D seismic.
In the short term, up to 10 wells will be drilled this year targeting the sandstone reservoirs to increase production, which is targeted to hit 3,000 barrels per day by year end.
Meanwhile, discussions with the Agricultural Land Reform Office have started to address shut-in production of around 500 barrels per day (bpd) of oil.
While the Office had approved exploration drilling in the Bo Rang area, it has yet to give its approval to the production licence granted by the Department of Mineral Fuels.
This led to Bo Rang production being shut-in until the matter was reviewed.
Carnarvon and ECO are also assessing a number of volcanic prospects intended to address current production levels.
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