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Roxi Petroleum raises US$20m through premium subscription

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Kazakh-based oil and gas group Roxi Petroleum (LON:RXP) is to raise US$$20m through a subscription at a premium by BOCO, the oil division of Chinese industrial group Bright Oceans. 

BOCO will take a 7.87% stake at 18p per share, a 16% premium to yesterday’s close and be able to appoint its own non-executive to the board.

Roxi shares have soared since it announced a new oil discovery on its BNG licence in Kazakhstan last July.

The BOCO funds together with the proceeds from the sale of Galaz will provide an additional US$50 million and allow the pace of development at BNG to be accelerated at a time when the cost of drilling is falling, said Clive Carver, Roxi’s chairman.

Roxi will get an additional US$28mln once the proposed sale of the Galaz Contract Area in Kazakhstan to Xinjiang Zhundong completes.

Xinjiang is listed on the Shenzhen Stock Exchange and has launched a US$100mln bid for Galaz, which is a third owned by Roxi.

SP Angel said the new funding is a significant fillip to a company already on an upswing due to the Galaz sale.

In the current market conditions the funding was all the more impressive and coupled with the Galaz disposal puts Roxi in a commanding position to dictate the pace and scale of its future work programme.

While some of the funding will be needed to diversify away from BNG asset, the undemanding equity market valuation makes it increasingly likely that the company will become a target for an acquisition, added the broker.

Shares rose 9% to 16.85p.


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