Cove Energy announces placing to raise £110 million and updates operations in Mozambique, Tanzania and Kenya.
Placing of 144,736,843 new Ordinary Shares at a price of 76 pence per new Ordinary Share, a 4.1% discount to the closing mid-market price of 79.25 pence on 3 November 2010, to raise £110 million (gross). The new Ordinary Shares are expected to be admitted to trading on AIM on 23 November 2010;
The net proceeds of the Placing, together with the Company's existing cash balances, will be used to fund its share of anticipated costs relating to its existing assets in Mozambique, Tanzania and Kenya and potential new opportunities, in particular:
- an anticipated increase in the pace of exploration and appraisal drilling and seismic activity in the Mozambique Rovuma Offshore Area 1, resulting from the recent Barquentine and Windjammer gas discoveries;
- the acceleration of a new 3D seismic programme offshore Kenya in 2011, followed by possible exploration drilling in 2012; and
- new ventures and business development, in terms of acquiring strategically relevant projects and further licence interests.
Cenkos Securities is Cove Energy's financial adviser, nominated adviser and broker and is acting as sole book runner to the Placing.
Drilling operations have commenced at Lagosta 1, the 5th well in the current Mozambique Rovuma Offshore Area 1 drilling programme. Lagosta 1 is located 16 miles south of the recently announced Barquentine discovery.
Commenting on the Placing, John Craven, CEO of Cove Energy, said:
'I am very pleased to announce this successful conditional placing with institutional and other investors. The new funds will ensure that Cove is adequately financed allowing the Company to continue the successful high impact exploration and appraisal deepwater drilling programme with its joint venture partners in offshore Mozambique where, following the Barquentine success, gas commercialisation options are now being actively considered.
Part of the proceeds from the Placing will also be used to bring forward the acquisition of new 3D seismic data over our recently acquired Kenyan acreage, in order to firm up future drilling prospects. Our ability to attract such significant new equity is testament to the strategy implemented by the Board which has yielded a portfolio of quality assets that now contain major gas discoveries at Windjammer and Barquentine and the first oil encountered, offshore East Africa, at the Ironclad well.
As part of our ongoing deepwater drilling campaign, operations have now commenced on the Lagosta 1 well in the central area of the Mozambique Rovuma Offshore Area 1 block. We warmly welcome our new institutional shareholders and, at the same time, I would like to thank our existing shareholders for their continued support at what promises to be an exciting time ahead.'