88 Energy Ltd (AIM:88E, ASX:88E, OTC:EEENF) has taken a strategic step to empower its shareholders while accelerating transformative projects in Alaska, announcing a rights issue to raise up to £6.29mln (A$12mln) of new capital.
The rights issue will give shareholders the opportunity to acquire 1 share for every 10 shares they currently hold on the record date of Friday 4 August, with a strike price set at 0.31p per share.
The primary purpose behind this move is to provide existing shareholders exposure to potentially transformational activity over the next 9 months.
“The rights issue is designed to allow existing shareholders exposure to potentially transformational activity over the next 9 months,” the exploration company said in a statement.
The targeted proceeds from this rights issue have been earmarked for crucial projects in Alaska, including the flow-testing of the Hickory‑1 well at Project Phoenix. In addition, funds will be allocated towards planning and permitting for a new drill program at Project Leonis. Simultaneously, the company aims to undertake drilling of development wells and work-overs on existing wells at Project Longhorn in Texas.
One noteworthy achievement in the company’s Alaskan endeavors is Project Peregrine, where updated resource estimates have revealed a astounding 2.4 billion barrels of prospective resources. The resources are spread across three project areas, namely Merlin, Harrier, and Harrier Deep.
The company attributes the improved resource estimation to a more condensed acreage position and predicts enhanced reservoir quality in the northern areas. This significant update comes after the disappointing outcome of the Merlin‑2 well in March 2022, where insufficient reservoir quality dampened initial excitement.
Established in 1996 and based in Perth, Western Australia, 88 Energy has garnered attention as an Australia-based oil and gas exploration company. Dual-listed on the ASX and AIM, the company primarily focuses on onshore Alaska and holds non-operator production interests in onshore Texas.
Despite a trading halt earlier due to a capital raise, the company is eager to push forward with its initial autonomous resource assessment at Project Icewine East, Alaska, which reveals a total estimated potential reserve of 1.03 billion barrels of recoverable oil from multiple reservoir zones.
The latest rights issue is expected to propel the company’s growth strategy and allow shareholders to participate actively in its future success. The purchase price of 0.31p per share appears to be set at an attractive level, providing investors an opportunity to acquire new shares at a potentially favorable rate. By offering shareholders this option, 88 Energy shows its commitment to empowering its existing investors and keeping them engaged in its expansion path.
The targeted use of the raised capital for strategic projects in Alaska indicates the company’s focus on maximizing its exploration potential in highly favourable areas. This calculated approach aims to transform 88 Energy from an exploration company into a formidable player in the oil and gas industry.
Moreover, the allocation of funds towards flow-testing the Hickory‑1 well at Project Phoenix and planning a new drill program at Project Leonis underscores the company’s dedication to value creation and enhancing its asset base.
Furthermore, the revelation of 2.4 billion barrels of estimated recoverable reserves at Project Peregrine has the potential to be a game-changer for the company. This substantial resource estimate, coupled with improved reservoir quality projections, could significantly impact the company’s future production capabilities, cultivating investor confidence.