Anglo African Oil & Gas PLC (LON:AAOG) has drummed up £8.25mln of funding from existing and new investors as it looks to extend a well at its Tilapia project in the Republic of Congo into a “potentially prolific” deeper layer.
Existing institutional investors have agreed to buy 52.3mln shares at a price of 5.2p apiece in a £2.7mln placing and the European High Growth Opportunities Securitization has pledged another £5.5mln at the same price.
The new cash will provide the AIM-listed company with the funds required to re-enter the TLP-103C well at Tilapia with a view to producing oil from the Djeno interval, as part of a revised operational plan for the field based on recent technical analysis of the well data.
The same interval at the adjacent Minsala field produces at a rate of 5,000 barrels of oil per day.
Executive chairman David Sefton said: “It has been our goal since inception to produce oil from the potentially prolific Djeno horizon.”
“Once completed, this fundraising will enable us to achieve this,” he said, adding that he expected to complete the fundraising soon, which was subject to binding legal documentation between the company and the investors.
AAOG had £120,983 cash in the bank at the end of 2018 but since March has been receiving monthly cash payments of roughly US$850,000 from Congolese national oil company Societe Nationale des Petroles du Congo to reimburse the costs of drilling 103C and other development work.
In a note to clients, analysts at 'house' broker finnCap commented: "The resulting higher share count and a later production start-date sees our risked-NAV fall to 27p/sh. However, if successful, the Djeno will deliver material free cash flow and, over time, allow a meaningful dividend to be paid."
In afternoon trading AAOG shares were trading at 4.90p, down 5.8% on Tuesday's close.
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