Chariot Oil & Gas (CHAR), Reabold Resources (RBD), Prospex Oil & Gas (PXOG), Petro Matad (MATD) and Anglo African Oil & Gas (AAOG)
The most interesting smaller oil and gas company news today is the Chariot Oil & Gas (CHAR) placing / open offer and announcement that the funds will be used to deliver a second well within the near term comprising the drilling of Prospect S in Namibia, in addition to the carried drilling of the RD-1 well in Morocco by Eni.
It is quite a large fundraising: CHAR is looking to raise approximately US$15.0 million by way of a conditional placing as well as an additional up to approximately €5.0 million by way of an open offer. It is expected that the fundraising will take place at 13 pence.
The fundraise allows CHAR to participate in two giant-scale wells this calendar year capturing the bottom of the cost cycle for drilling. Success in either well would be transformational, and would also de-risk significant additional portfolio in the relevant licence. This comes after continued investment throughout the portfolio during the industry downturn which has allowed CHAR to build a drilling and prospect inventory of giant-scale opportunities. CHAR will continue to progress operations in Namibia to drill Prospect S in the second half of this year to benefit from synergies with third-party operations, and, in combination with their other partners, support Eni in their operations on the RD-1 well in Morocco which is scheduled to spud in March 2018.
Other interesting news today from Reabold Resources (RBD) which issued a statement regarding recent press speculation relating to a significant placing of shares by the company. Having deployed the funds raised last year, the board considers that there is an opportunity to exploit further investments within the sector. Accordingly RBD confirms it is exploring market appetite for a placing.
Interestingly, both of the above were flagged in advance on Twitter by the same person, presumably in possession of inside information.
Placings in the run up to a drill always are a risk since it is so tempting for management to capitalise on interest and volume in their shares and raise money while the opportunity is there. Professionals also vigorously encourage it due to the huge fees involved and further profits from possible forward selling. Double placings also are becoming more common: Prospex Oil & Gas (PXOG), for example, took advantage of investor interest in the run up to its drills and did double placings twice.
Placings are not necessarily a bad thing and, if combined with the commencement of a fundamentally strong project, the share price performance can subsequently be spectacular, witness Petro Matad (MATD) recently, nearly doubling following its 6.5p placing a few weeks ago. But could it now be ripe for a second placing too?
There also is talk on Twitter about a placing for Anglo African Oil & Gas (AAOG) to fund its forthcoming drill. Research carefully: the admission document reveals among other things total risked net resources of only 4.24 MMstb - a long way from the 66.5 MMstb figure being touted - and that is for the full field, the initial TLP-103 well would be a fraction of that. Be careful here, all is not necessarily as it seems at this company and it is far from certain that the proposed drill will ever happen.
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The author holds one or more investments in one or more of the companies mentioned so this post cannot be viewed as independent research. This post does not constitute investment advice or a recommendation to buy or sell and may be incorrect or outdated.