Southern Energy Corp (TSX-V:SOU, AIM:SOUC, OTC:MAXMD) has announced it is planning to raise approximately C$38.9 million (£24.5 million) via a proposed prospectus offering and concurrent placing.
The company said the net proceeds from the offering would be used to extend and accelerate the planned drilling program at its Gwinville property, and for general working capital purposes, such as increasing financial flexibility for potential accretive acquisition opportunities.
The offering consists of an underwritten bought deal prospectus led by Eight Capital of 26.06 million shares at a price of C$0.87 (£0.55) for aggregate proceeds of C$22.7 million (£14.3 million).
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It includes a concurrent placing by way of an accelerated bookbuild of approximately 18,692,661 million shares at C$0.87 (£0.55) per placing share for aggregate gross proceeds of C$16.2 million (£10.2 million).
Meanwhile, Southern has provided a drilling update on its Gwinville site where further drilling is expected to begin in 4Q, 2022.
The company said all three of the horizontal wells from the Gwinville 1903 padsite were flowing to sales at highly restricted rates, with the padsite currently producing approximately 15.3 million cubic feet per day, or 2,550 barrels of oil equivalent of natural gas per day.
Southern CEO Ian Atkinson said, with all three Gwinville wells now in production, the company had more than doubled its corporate production, illustrating the significant organic growth potential it could deliver to shareholders.
“Following the encouraging test results of our ongoing operations at Gwinville, utilizing our improved Generation 3 completion design, we believe that this is an opportune moment to finance the business for further, operationally-driven growth through the offering,” Atkinson said.
“In tandem, we continue to see significant opportunities for accretive acquisitions in our area of expertise and believe that this financing will allow us to continue to act nimbly and opportunistically as we execute our growth strategy.”
Deal terms
Under the terms of the prospectus offering, Eight Capital, as lead underwriter and sole bookrunner, together with a syndicate of underwriters will purchase 26.1 million prospectus shares on a bought deal basis. The underwriters will have an option to purchase up to an additional 15% of the prospectus shares issued under at the prospectus price for market stabilization purposes, or to cover over-allotments, exercisable in whole or in part at any time until 30 days after the closing of the offering.
Closing of the prospectus offering is expected to occur by July 7.
The placing, led by Canaccord Genuity Limited and H&P Advisory Limited, will only be made available to invited eligible institutional and professional investors in certain specified jurisdictions. The timing for the close of the bookbuild will be determined by the joint brokers and the company. A further announcement confirming the number of new placing shares to be issued pursuant to the placing and final details of the bookbuild is expected shortly, Southern Energy said.
The results of the Placing are expected to be announced on June 24, and the placing shares are expected to be admitted to trading on AIM on or around July 5.
Southern Energy said it intends for the placing to be conducted in conjunction with the prospectus offering, but is not inter-conditional with the prospectus offering.
Southern Energy is a natural gas exploration and production company focused on acquiring and developing conventional natural gas and light oil resources in the southeast Gulf States of Mississippi, Louisiana, and East Texas
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