Deltana opens $16m IPO for Italian exploration

West Perth-based oil and gas explorer Deltana Energy Ltd has opened its initial public offer to raise $16 million, funding a planned exploration program in northern Italy's Po Valley region.

The company, which will issue 64 million shares at 25 cents each to raise the money, also plans to undertake a non-renounceable entitlements issue of one option for every three shares held in the company three months after it commenced trading on the Australian Securities Exchange.

Deltana has acquired the right to farm-in up to 50 per cent of UK-based Ascent Resources plc's working interest in two prospective permits - the Bastiglia Permit and the Cento Permit - totalling 827.9 sq kms in the Po Valley region of northern Italy.

Deltana's aim is to become a profitable oil and gas company within three years by acquiring meaningful equity positions in the Mediterranean, the company said in its prospectus.

The company has set a minimum subscription level of $12 million, and will accept oversubscriptions of up to $2 million.

The offer is not underwritten.

Deltana is chaired by former Oil Search chief executive and Otto Energy Ltd director Jaap Poll in a non-executive capacity, while science lawyer Geoffrey Bone will act as chief executive and managing director.

They are joined on the board by Richard Kingsbury, who will serve as chief financial officer and company secretary, and David Rowell.

Bell Potter Securities Ltd will act as sponsoring broker to the deal, with HLB Mann Judd to serve as auditor and investigating accountant. Steinepreis Paganin and Rome-based law firm Chiomenti Studio Legale will provide legal advice to the company.

The offer, which opened today, will close on October 24.

The full text of a company announcement is pasted below

Deltana Energy public share offer opens today (2 October) for the issue of up to 64M shares at 25c each to raise up to A$16M.

• Prime oil & gas assets in the prolific Po Valley region of northern Italy.
• Close to established infrastructure and large, expanding, premium-price markets.
• Five drilling targets in a proven petroleum province.
• Near-term growth strategy to build a profitable Australian-domiciled petroleum production company with an immediate focus in the highly priced and developed Mediterranean region.

A significant new international oil and gas exploration initiative is set to commence shortly - with an initial focus in the prolific Po Valley region of northern Italy - following a A$16 million Initial Public Offer (IPO) for newly-established Australian oil & gas company Deltana Energy Ltd. The offer opens today (Tuesday, 2 October 2007) with the Company aiming to list on the Australian Securities Exchange in early November.

Led by a highly experienced management team with significant international experience in large petroleum companies including Shell, BHP Billiton and Woodside, Perth-based Deltana Energy has acquired exclusive rights to participate in two premium oil and gas permits in a proven petroleum province in the Po Valley region of northern Italy.

These assets will form the cornerstone of a long-term growth strategy predominantly focused in the Mediterranean region, where the Company has identified several attractive opportunities in highly priced and well developed energy markets, including in Southern and Eastern Europe. Deltana is also reviewing opportunities within Australasia and the Americas.

Following a successful A$1.3 million seed capital raising completed earlier this year, Deltana lodged a Prospectus with the Australian Securities and Investments Commission (ASIC) on 24 September 2007 for the offer of up to 64 million shares at 25c each, to raise up to A$16 million. The IPO is scheduled to close on 24 October 2007. Bell Potter Securities Ltd is acting as lead broker to the offer.

Deltana can earn up to 50% equity in the highly prospective on-shore Bastiglia and Cento permits in the Po Valley, which host five drilling targets and several additional prospective play types within an area totaling 827.9sq km. The permits are located adjacent to existing gas fields with proven recoverable reserves totaling 1Tcf+, in a region currently commanding premium prices for in-situ gas reserves.

Seismic surveys completed over the target area in the south central part of the prolific Po Valley hydrocarbon basin indicate the potential to host undiscovered gas of 150+ Bcf in several prospects.

The Cento and Bastiglia permits are currently wholly-owned by UK-based Ascent Resources plc, which has significant experience in the region - which offers exploration opportunities with comparatively moderate cost and exploration risk. Ascent's substantial 20-project portfolio includes oil and gas ventures across Europe, in northern and central Italy, Hungary, Switzerland, Spain, Slovenia and the Netherlands.

Deltana's A$16 million Initial Public Offering (IPO) will underpin the commencement of an intial two-year drilling program targeting the estimated 186 Bcf (5.32 billion m3 'undiscovered gas in place') Gazzata Prospect and either the estimated 165 Bcf (4.72 billion m3 'undiscovered gas in place') Rubiera Prospect, or Prospect 'C'.

The Company anticipates that drilling will commence at Gazzata prior to mid-2008, at an estimated total dry hole cost of 3.6 million Euros (A$5.9 million). In order to accelerate exploration of the Gazzata Prospect, the Company intends to purchase and reprocess existing 2D seismic data at an estimated cost of 1.5 million Euros (A$2.4 million).

The Bastiglia and Cento permits were identified following Italian oil company Eni SpA's relinquishment in 1998 of a substantial portion of its Po Valley exploration portfolio, enabling other companies to conduct positive early-phase exploration work over stratigraphic areas considered the most prospective within the Po Valley basin.

Eni previously held a dominant position in northern Italy, with petroleum acreage covering almost the entire Po Valley, resulting in the restriction of drilling activity to the most obvious structural plays and prospects. Subsequent exploration activity, including that conducted by Ascent, has identified large undrilled stratigraphic traps with associated Direct Hydrocarbon Indicators (DHIs).

Established to assess advanced opportunities in premium petroleum markets located adjacent to such highly prospective exploration opportunities, Deltana aims to become a profitable oil and gas company within its first three years of operation.

Deltana's Chief Executive Officer, Mr Geoffrey Bone, said the IPO provided Australian investors with a unique opportunity to gain exposure to the excellent profit potential offered by advanced opportunities in profitable, high-demand energy markets.

"Deltana is acquiring meaningful equity positions in the Mediterranean, where there are proven hydrocarbon basins, good databases, existing road, rail and pipeline infrastructure, available 'top-price' markets and stable political systems, all in a region attractive to world-class industry professionals," he said.

"The Po Valley represents a superior opportunity, with gas attracting a well-head price of at least 7.5 Euros per Mcf (A$12.30 per Mcf) and access to the gas transportation system guaranteed under the deregulation of the gas pipeline business.

"Further, in an expanding and increasingly competitive supply market, gas distributors can purchase proven reserves 'in the ground'," he added. "These distributors are potentially willing to, and capable of, operating the development and production of a field, thereby limiting a permit holder's exposure to development costs."

Highly Experienced Board and Management Team

Mr Bone has extensive experience in corporate management positions with leading international petroleum companies, including Shell and BHP Billiton. His work with some of the largest oil and gas business networks and European operators in developing both upstream and downstream energy businesses has directly led to Deltana's unique opportunity in the Po Valley and potential additional opportunities in the Mediterranean region.

He is joined on the Deltana Board by Non-executive Chairman, Dr Jaap Poll, a petroleum geologist whose career began with Shell International in Central America, Europe, the Middle East and Australia. Dr Poll subsequently held senior positions including Exploration and Production Manager (onshore) and Exploration Adviser (offshore) with Woodside Petroleum Ltd, Managing Director of Petroz NL and Chief Executive Officer of Oil Search Ltd.

Non-executive Technical Director, Mr David Rowell, brings an additional 35 years' experience in the international oil and gas sector to the Deltana Board. Mr Rowell has held key executive positions in petroleum development, production and well engineering with companies including WAPET, Shell (UK) Expro and Woodside.

Chief Financial Officer, Mr Richard Kingsbury, has more than 30 years' experience in strategic corporate planning, including significant involvement in corporate floats, mergers and acquisitions in the resources and oil and gas sectors.