Mosman Oil and Gas Ltd (AIM:MSMN) has raised £1.1mln of new capital through a placing to fund the drilling of its first re-development well at the Challenger project in Texas.
At Challenger, 97% owned by Mosman, the plan is to start drilling in August or September. The target is to increase Mosman’s net production to 245 barrels of oil per day (boepd), from around 130 boepd.
Mosman told investors that Cinnabar, a 348-acre area within the Challenger project, has the potential to be a transformational project for the company. And it believes there is potential for multiple Cinnabar development wells.
"We are pleased that our early investment in Cinnabar has matured at a time of strong oil and gas prices, making this well a compelling investment and providing significant further growth potential," said chairman John Barr.
He added: "Recent focus in respect to the USA projects has very much been about maximising production. That is reflected in the recent strong production rates in the March quarter.”
The placing sees 1.37bn new Mosman shares sold to investors at a price of 0.08p per share.
It was arranged through the company’s broker ETX Capital and participating investors will also receive warrants (687.5mln warrants exercisable at 0.16p for 24 months).
Based on the expectation that the company continues to run above operating cashflow breakeven, as it as at current production and current oil and gas prices, it expects that the placing will also provide sufficient working capital for the next 12 months.