PetroNeft raises $2.12m for investment programme
OIL and gas explorer PetroNeft has raised $2.12m (€1.9m) in a share placing.
The company is placing 107,755,037 new ordinary shares at a price of £0.015 (€0.0178) per share.
The placing price represents a premium of approximately 58pc to the closing price of £0.0095 per ordinary share on 11 December.
The funds raised by Russia-focused PetroNeft will mainly be used to cover costs associated with the company’s investment programme next year.
The 2020 capital plan is aimed at a combination of reducing ongoing operational costs and increasing production, cash flow and reserves, “leading in increased asset value”, PetroNeft said.
One way it plans to reduce costs is through the installation of a mini oil-processing which will enable produced oil to be refined into fuel for use in the field. The cost of this project will be paid back in less than one year and is expected to reduce operating costs by at least $1 per barrel on PetroNeft’s License 61, the company said.
Some of the placed shares will be used to cover outstanding salary to senior management and directors’ fees.
“We are very pleased with the outcome of the placing, especially as we successfully managed to place at a 58pc premium to the prevailing share price,” said David Golder, chairman of PetroNeft Resources.
“This shows great confidence and support for the company.”
The placing is conditional upon receiving shareholder approval on January 7.
Following admission, the company’s total issued share capital consists of 828,885,530 ordinary shares of €0.01 each.
Elsewhere, the company has negotiated a one-year extension to a $2.5m loan with a potential second-year extension if 20pc of the capital is repaid by 15th December 2020.
PetroNeft was founded in 2004 by Dennis Francis, who retired as group chief executive in November last year.