Australian firm needs U.S. $50 million for Coast oil
SHARES PLACEMENT IS BEING MADE TO SOPHISTICATED INVESTORS AS WELL
AS INTERNATIONAL AND INSTITUTIONAL CLIENTS IN AUSTRALIA, LONDON AND
NAIROBI (Xinhua) -- Australian energy firm, Pancontinental Oil and
Gas has announced plans to raise 50 million U.S. dollars to fund
its ongoing exploration activities in Kenya.
The company said the funds will be raised in the Australian market
to fund exploration programmes over Kenyan Blocks L10A & L10B,
further seismic work over Kenya Block L8 and a portion of its share
of costs of the upcoming L8 Mbawa well.
CEO Barry Rushworth said in a statement that the funds will also
cater for seismic work over Kenya Block L6, seismic work over
Namibia EL 0037 and for business development and general working
"The operators of our four Kenyan projects are aggressively moving
forward with the exploration programmes," Rushworth said in a
statement received in Nairobi on Friday.
Pancontinental Oil Gas announced recently that the Kenya L8 licence
operator, Apache Kenya had secured deepwater drilling ship for
giant Mbawa Prospect, a well on an offshore Kenyan oil exploration
Apache said it’s anticipating a spud date within in the third
quarter of 2012, with the actual date depending on when the
drilling rig is finished with its current operations.
"Apache Kenya Limited (Apache) has secured the use of the deepwater
drilling ship Deepsea Metro 1 to drill the giant Mbawa Prospect,"
the firm said in a statement on April 10.
It said then that the well is expected to take some 45 to 60 days
to complete to a planned total depth of 3,250m subsea in water
depth of 860m, easily within the range of modern equipment.
The development comes as Kenya’s energy ministry officials have
expressed optimism the discovery of commercial quantities of oil
will ignite fresh investments in most of the country’s under-
While decades of oil exploration failed to yield results, in most
cases, ending with nothing less than a bottle of crude oil, an oil
expert said there were high hopes of Kenya striking oil with the
advent of new oil exploration technologies.
Engineers working for an Irish oil exploration firm, Tullow Oil,
announced last month that quantities of oil were discovered in
Turkana, northern Kenya.
The rock on which the oil was discovered is over 20 metres deep and
is believed to bear larger oil quantities than those discovered by
Tullow in Uganda three years ago.
Kenya and the entire East African region, has witnessed intensified
exploratory activity since 2003, which led to the discoveries of
oil and gas in Uganda and Tanzania. There is also ongoing
exploration in Ethiopia.
"This capital raising means that Pancontinental
will remain in control of its own strategic direction and ensures
that it continues to maintain its significant interests in its
projects in the key East African region," Rushworth
The funds will be raised through a 45 million dollar placement of
up to approximately 257.1 million shares at an issue price of 17.5
cents per share to sophisticated and professional investors and
through a share purchase plan capped at 5 million dollars to
existing shareholders, also at 17.5 cents per share.
The firm said the Placement is being made to sophisticated
investors as well as international and domestic institutional
clients of Hartleys Limited, principal Broker to Pancontinental and
Broker to the Offer in Australia, London and elsewhere.
The Placement was also extended to Directors of the Company, the
majority of which have elected to participate in the placement
(subject to shareholder approval).
Pancontinental is partly "free-carried" through the Mbawa well by
farmout to Tullow Kenya B.V. a wholly owned subsidiary of Tullow
Tullow’s contribution on Pancontinental’s behalf to a recent new 3D
seismic survey in L8 and increased drilling cost estimates have
meant that Pancontinental will contribute a portion, alongside
farminee Tullow, to its share of Mbawa drilling costs.
"The raising maximises Pancontinental’s exposure to success by
maintaining its equity levels in these very exciting projects.
"Pancontinental should be fully funded for the next 12 months
without recourse to early dilution through farmout," Rushworth
The East African nation has a huge mineral potential but its
exploration efforts have only picked in the last five years with
the awarding of commercial licences in prospecting for oil, gold,
coal, geothermal and rare earths.
Kenya is also expected to tender for the exploration of natural gas
in Kilifi, near the coastal city of Mombasa, according to the
Permanent Secretary in the Ministry of Energy Patrick Nyoike.
One of the contributors for slow exploration of minerals in Kenya
has been lack of mapping of the resources.
The East African Rift Basin system is one of the last of the great
rift basins to be explored.
New discoveries have been announced on all sides of Africa Oil’s
virtually unexplored land position including the major Albert
Graben oil discovery in neighbouring Uganda.