Pryme Oil and Gas (ASX:PYM) has announced a private placement of 21.25 million fully paid ordinary shares (equivalent to approximately 11% of Pryme’s issued capital) to be issued at $0.08 per share, to raise A$1,700,000.
In addition the company has announced a 1 for 8 non-renounceable rights issue providing the opportunity for eligible shareholders to acquire additional shares in the company.
The funds are to be used for drilling the Deshotels 20-H No.1 Well in the North Bayou Jack Field, Louisiana. Pryme’s working interest in the well is 40%, equivalent to a 30% net revenue interest (NRI).
It intends to complete the capital raising program at the same pricing as under the placement ($0.08 per share) to raise a further A$2,000,513.
Shares issued pursuant to the placement will be eligible to participate in the rights issue. The placement shares are expected to be issued on or about 6 September 2010. The Record Date for the rights issue is expected to be 14 September 2010.
Justin Pettett, managing director, said “drilling of the first well, the Deshotels 20-H No.1, in the Turner Bayou Chalk project is underway. This is potentially the greatest value adding project to be undertaken by the company."
"The capital raising, which incorporates the placement and the rights issue, has been undertaken to ensure that through this period the company maintains a sufficient capital buffer to meet any unexpected calls on capital in addition to normal working capital requirements.”
“The timing of the rights issue is such that shareholders will have the opportunity to see more advanced results from the drilling of the well prior to the closing date for subscription to the issue. The opportunity to purchase additional shares in Pryme is open to all eligible shareholders of the company as at the record date which is expected to be 14 September 2010,” he added.
The funds to be raised by the private placement and the rights issue are primarily to ensure that the company remains well funded through the drilling and, if warranted, completion of the Deshotels 20-H No.1 well so that, in addition to funding normal working capital requirements:
- If a decision is taken to commence a second Turner Bayou Chalk project well prior to significant revenue flows from a successful Deshotels 20-H No.1 well, Pryme will be able to participate at its current working interest level;
- In the event of cost overruns on the Deshotels 20-H No.1 well, the Company can continue to fund its proportionate share; and
- The company can continue with its planned land-based drilling program on the periphery of Catahoula Lake once the water level has been lowered to a level permitting access to drill locations.
The combined effect of the private placement and a fully subscribed rights issue will be the raising of up to A$3,700,513 by issuing a maximum of 46,256,417 new shares, to take the issued capital of the company to 225,057,754 fully paid ordinary shares.