Calima Energy Ltd (ASX:CE1) has raised A$20 million via an institutional placement of 100 million new fully paid ordinary shares to institutional and sophisticated investors at an issue price of A$0.20 per share.
This placement was strongly supported and significantly oversubscribed.
The placement price of A$0.20 per new share represents:
- a 13% discount to the last close price on February 4, 2022, (A$0.23 per share); and
- a 10.6% discount to the 5-day VWAP of shares up to close on February 4, 2022, (A$0.224 per share).
Settlement is expected to occur on Wednesday February 16, 2022, with quotation of the new shares expected on Thursday, February 17, 2022.
“I would like to thank all stakeholders for their support and welcome a number of key institutional shareholders to the company,” CE1 chairman Glenn Whiddon said.
“Emerging resource companies succeed with excellent assets and quality management, with the downside protected through a strong balance sheet. This raise will ensure these criteria are met while providing upside to rising energy prices. \
"The raise was led by Canacccord Genuity (Australia) with significant investor interest also generated from our UK bankers, Auctus Advisors and Hannam & Partners.
“I would like to thank them all for their efforts and the collaborative approach to the raising.”
Use of funds
CE1 will use the funds for short- and medium-term goals. In the immediate term, the net proceeds will reduce the amount drawn on its revolving credit facility which also reduces hedging requirements under the facility.
Short-medium term capital investments include:
- C$2.1 million – Complete Q1 wells – Stimulation and tie in Pisces 3; completion and tie-in of Gemini wells;
- C$1.6 million - Waterflood – facilitates the timing of investment vs return (invest in slow decline production and increase reserves);
- C$1.5 million - North Thorsby completion - Fracture stimulation, 3rd party gas tie-in, and single well battery. With success, considerable expansion of booked drilling inventory;
- C$2.0 million - Expansion to the Thorsby main battery to accommodate further H2 2022 development;
- C$2.0 million - Forward planning – supply chain management, getting ahead of logistics bottlenecks, committing to services, and pre-purchasing tangible equipment; and
- CE1 will also use funds to strengthen the balance sheet to optimise capital management and reduce volatility in working capital drawdowns.
Oil and gas prices hit multi-year highs
Speaking of the raise and the current macro environment, CE1 CEO and president Jordan Kevol said, “We believe that this shows a significant recovery of investment into the oil and gas sector with WTI now trading around ~US$90 WTI and natural gas around C$4, both of which are multi year highs.
“It has been nearly eight years since we have had these levels of commodity prices. The global market fundamentals around supply and demand are both setting up well for this bull run to not be short lived.
“Calima is well capitalised to take advantage of this environment.”