(Alliance News) -Â Shares in Mosman Oil & Gas Ltd fell on Tuesday after a GBP1.1 million share placing to fund the drilling of the first re-development well at the Challenger project in Texas.
Mosman - a Sydney-based oil and gas company with projects in Australia and the US - raised the funds through a placing of 1.38 billion shares at a price of 0.08 pence each. This price represents a 28% discount to Monday's closing price of 0.1125p.
Shares in Mosman were trading 28% lower at 0.081p on Tuesday morning.
Investors also will receive a one warrant with every two new shares, exercisable at a price of 0.16p with a term of 24 months, with a total of 687.5 million warrants being issued.
If targeted production rates are achieved, Mosman said net production could increase 88% to around 245 barrels of oil equivalent per day from the 130 barrels reported for the first quarter of 2022.
Based on current production rates and commodity prices, Mosman is currently operating above cashflow breakeven, it said, a situation that will be further improved with a successful well at Cinnabar.
"This means that the placing will allow for the drilling and development at Cinnabar and, based on a successful well, is expected to provide sufficient working capital for the next 12 months," the company said.
By Lucy Heming;Â lucyheming@alliancenews.com
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Mosman Oil Gas (MSMN)