LONDON (Alliance News) - Northern Petroleum PLC Thursday said it plans to raise GBP1.2 million in a share subscription of 40 million new shares at 3 pence each, and a further GBP1.2 million from open offer for up to the same amount of shares at the same price.
Shares were down 8.6% at 3.20 pence Thursday.
Northern Petroleum will use the funds raised in the subscription to fund its acquisition of assets in northwest Alberta, Canada. It believes the net cashflow from these assets, combined with its existing assets, are forecast to broadly cover its general and administrative cost through to 2016 at an oil price of USD47 per barrel.
The company will pay CAD250,000 for the assets in Alberta, as well as assuming an abandonment liability for all of the wells and facilities acquired, from an undisclosed production company listed on the Toronto Stock Exchange.
"The acquisition of these assets provides the company with material additional production and reserves and is a good example of the growth opportunities available in the current oil price environment. Due to the location of the assets and their associated facilities, there is also the opportunity to increase the company's existing production base with reduced operating expense," said Chief Executive Officer Keith Bush in a statement.
"Additional funding from the open offer will provide useful working capital support with the potential to unlock further opportunities for production and exploration growth and accelerate production development in Canada," Bush added.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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