88E raises $32m for Alaskan oil

Shares in Subiaco oil play 88 Energy were down 14 per cent on the back of announcing a completed $32 million capital raising offered to institutional and sophisticated investors.

The company had sought to raise capital to fund drilling at its Merlin-2 well in Alaska, which was cleared for drilling last week and is expected to be spudded in early March.

The operation is set to cost roughly $39 million.

88E is will pocket around $30 million from the placement, which offered company shares to investors at 3.5 cents, a 10 per cent discount on its 30-day volume-weighted average price.

The company will issue 914.2 million fully paid ordinary shares.

Euroz Hartleys was sole lead manager and bookrunner to the placement.

The company said capacity under the raising had been increased to accommodate investor demand.

88E last raised capital for the Merlin well less than six months ago, collecting $24 million from investors in September 2021 with shares up for grabs at 2.8 cents each.

In its announcement to the ASX today, 88E said external factors had put some pressure on budgeting for the operation.

“COVID-19 supply chain issues and global commodity price increases have placed some pressures on budgeted Merlin-2 costs, however, lessons learned from the Merlin-1 program have allowed 88 Energy to mitigate many of these cost pressures,” its statement read.

88E managing director Ashley Gilbert said the placement meant the company was well-funded.

“While budgeted well costs have increased due to global supply chain pressures, it is important to note that 88 Energy is still expected to drill and appraise Merlin-2 at substantially lower cost levels relative to other operators on the Alaskan North Slope,” Mr Gilbert said.

“Completion of this placement ensures 88 Energy is funded to undertake the full suite of targeted appraisal activities at the Merlin-2 well, including flow testing of the well.”

At the time of writing, 88 Energy shares were down 10 per cent and trading at 4.5 cents.