South Perth-based oil and gas explorer Central Petroleum Ltd has signed an option underwriting agreement with Martin Place Securities Pty Ltd to guarantee a $4 million capital raising once exercised.
South Perth-based oil and gas explorer Central Petroleum Ltd has signed an option underwriting agreement with Martin Place Securities Pty Ltd to guarantee a $4 million capital raising once exercised.
The full text of a company announcement is pasted below
Central Petroleum Ltd. (ASX symbol: "CTP") - one of Australia's largest net onshore acreage holders with permits spanning more than 230,000 square kilometres - has signed an Option Underwriting Agreement ("the Agreement") with Martin Place Securities Pty Limited that will guarantee the exercise of at least 20 million Central options into shares at the exercise price of A$0.20 per share.
The underwritten 20 million options would raise a total of $4 million and, as the underwriter will also endeavour to underwrite the additional 19.4 million options, the total amount raised could increase to $7.9 million.
The conditional Agreement signed today will ensure that close to half of Central's 39.4 million options expiring on 30 June 2007 will be converted into shares by the underwriter, Martin Place Securities, and boost Central's cash holdings by another A$4 million before costs from A$5.3 million as of 31 March 2007.
The Agreement, which is subject to normal commercial terms including the maintenance of commercial indices and general market conditions, takes Central a step closer towards finalising its 2007-2008 drilling program in the Amadeus, Pedirka, Lander and Georgina basins of central Australia.
Central Petroleum has previously advised that it was the intention of the Company to make a Non-Renounceable Entitlements Issue of one (1) new option for every two (2) shares held priced at 2.5 cents per new Option, with each Option having a 30 June 2010 expiry date and a conversion price of 25 cents. The proposed Record Date of the underwritten entitlements issue would be timed to include any shares issued under the conversion of the 30 June 2007 Options.
Just last week, Central announced the main commercial terms of a second major preliminary farmout agreement to be signed with Advent Energy Ltd., a company backed by ASX-listed pooled development fund, MEC Resources (ASX symbol: "MMR"). Together with the first preliminary farmout pact signed with Petroleum Exploration Australia Ltd. in early June, Central aims to secure 80% of funding from the two farminees for the drilling of up to 54 exploration wells and the acquisition of A$54 million worth of seismic in all of Central's 18 permits and permit applications, while still retaining a 60% working interest and operatorship.
Commenting on the arrangement, Central's Managing Director Mr. John Heugh said, "The underwriting agreement, along with the recent farmout pacts, is yet another affirmation in the management and strategy of Central. While we expect many of our option holders to readily convert their options into shares, the underwriting agreement serves as an additional motivator."
Agreeing, Mr. Barry Dawes, Managing Director of Martin Place Securities, said, "We believe in Central's strategy and we like their assets. Hence, we are prepared to invest in the long-term future of the company."
Mr. Dawes is also a founder of Sydney-based oil junior Petroleum Exploration Australia Limited, which is in the process of finalising the first major farmout agreement with Central.
Central's first 3 well programme is planned to be drilled during the latter half of 2007 and will target the Mount Kitty prospect, which hosts an estimated 1.7 trillion cubic feet of wet gas and 105 billion cubic feet of helium in "high" P10 prospective recoverable reserves, according to independent geological reports. These will be the first onshore wells drilled in the Northern Territory in 15 years. The planned programme also includes the Ooraminna 2 well, an updip test from a known gas discovery well targeting 0.7 billion cubic feet of gas at "high" P10 prospective recoverable resource level and the Blamore oil prospect with "high" P10 prospective recoverable resources of 94 MMbbls.
Earlier in March, Central completed the acquisition of 484 kilometres of 2D seismic data over three major prospects in the Amadeus basin, including Mount Kitty, Ooraminna (block EP 82) and Waterhouse (EP 112). These prospects could potentially hold up to 3.4 Tcf of gas in P10 prospective recoverable reserves with potential for wet gas or condensate credits as well as Helium..
To date, there have been only 37 exploration wells drilled in the Amadeus basin, which yielded three commercial discoveries totalling 150 million barrels of oil equivalent. Central is exploring for conventionally reservoired oil, gas and helium targets, as well as coalbed methane in the Pedirka basin.
According to the Northern Territory Geological Survey department, the Amadeus basin alone could host up to 35 Tcf of gas or 6 billion barrels of oil equivalent of oil and gas in potential reserves.Independents have reported prospective recoverable resources of 34-70 TCFG in coal bed methane (CBM) in Central's Pedirka Basin permit package.
Central plans to utilise any proven reserves in a centrally located gas to liquids plant (GTL) to produce ultra-clean diesel, jet fuel and naphtha.
