Conditional Placing and Subscription to Raise up to $20.0m

Source: www.gulfoilandgas.com 7/23/2014, Location: Africa

Sirius Petroleum has conditionally raised gross proceeds of up to US$20,000,000 by way of a placing and a subscription (the "Placing and Subscription").

- Conditional Placing of 63,530,215 Ordinary Shares and Subscription of up to 326,333,333 new Ordinary Shares, being an aggregate of up to 389,863,548 new Ordinary Shares at 3 pence per share ("New Ordinary Shares") to raise up to £11,695,906 (approximately US$20,000,000) before expenses;

- The total cost for the initial well is estimated by Schlumberger, the world leading oil services company, to be approximately US$25,100,000. The board of directors (the "Board") is therefore also seeking further funding to meet the remaining well cost ("Further Funding");

- The Placing and Subscription are conditional upon, among other things, the Company raising the Further Funding on or before 15 September 2014. Such funding may be in the form of debt, equity or pre-payment for crude offtake, and the Company is in discussions with providers of finance to this end;

- The Placing and Subscription are also conditional on among other things, shareholder approval at the General Meeting of the Company, convened for 13th August 2014, to authorise the Directors to allot the New Ordinary Shares for cash on a non pre-emptive basis;

- The proceeds of the Placing and Subscription to provide the Group with the equity portion of the funding required to drill its initial well; and

- The New Ordinary Shares will if issued represent up to 27.66 per cent. of the Company's enlarged share capital following Admission.

Commenting, Bobo Kuti, Chief Executive, said:
"We have been delighted with the response to the equity raise from the UK market. I would like to thank shareholders for their continuing support and believe that we can now look forward with confidence to deliver on our strategy to develop our first off-shore marginal field and the first step in building a range of development and producing oil and gas assets in Nigeria."

Background to the Placing and Subscription
Sirius is seeking funding in order to bring the off-shore Ororo field, located in OML 95, in which it has a 40% economic interest (pursuant to the terms of the Finance and Technical Service Agreement dated 5 October 2011), into production. The total field development includes the proposed drilling of three wells, targeting daily total field production of circa 6,000 bopd. The total cost for the initial well has been estimated by Schlumberger, the leading oil services company, which has performed a technical analysis, performed the well development plan and will be conducting the drilling operations for the Company on a turn-key basis at approximately US$25,100,000. The actual cost of the well may vary from this estimate.

The Board is exploring a number of opportunities to fund the balance of its initial drilling costs, which may be in the form of debt, equity or pre-payment for crude off-take. Such Further Funding may also enable the Company to accelerate its drilling programme, so that additional wells can be drilled in a shorter time period, and for the development of the Company's other oil and gas interests in Nigeria.

Placing and Subscription
The board is conscious of the dilutive effect of the Placing and the Subscription on existing shareholders but in light of the substantial funding required, the need to fund the Ororo field in a relatively short time-frame and the additional costs involved in a rights issue or open offer, the board determined that the fundraising should proceed by way of the Placing and Subscription.

The Company's broker, Cantor Fitzgerald Europe ("Cantor"), as agent for the Company, has entered into conditional placing commitments with placees to raise £1,905,906 (before expenses) by way of the issue of 63,530,215 Ordinary Shares (each a "Placing Share") at 3.0 pence per Placing Share ("Placing Price") ("Placing").

Contemporaneously, the Company has entered into conditional subscription commitments with subscribers that it has secured to raise up to £9,790,000 (before expenses) by way of the issue of up to 326,333,333 Ordinary Shares (each a "Subscription Share") at the Placing Price ("Subscription").

Neither the Placing nor the Subscription is underwritten. The terms of the Placing and Subscription are identical in all material respects.

The Placing and Subscription are conditional upon, among other things, the Company raising the Further Funding. The form of such funding has not been determined but may take the form of debt, prepayment for off-take or equity. The Company has not yet agreed terms for the provision of the Further Funding. If such Further Funding is not raised on or before 15 September 2014, the Placing and Subscription will terminate and neither the Placing Shares nor the Subscription Shares will be issued.

The Board is keen to minimise shareholder dilution and therefore, dependent on the nature and amount of the Further Funding available, the Board reserves the right to partly or wholly reduce the amount of the Subscription (but not the Placing) and replace it with non-equity. The Company looks forward to concluding the Further Funding and will update shareholders accordingly when the necessary commitments are in place.

The Placing Shares and, if not scaled back, the Subscription Shares will represent approximately 27.66 per cent. of the Enlarged Share Capital. The Placing Price is at a discount of approximately 6.98 per cent. to the closing middle market price of an Ordinary Share on 22 July 2014, being the last practicable date prior to the publication of this announcement. The gross proceeds of the Placing and the Subscription are estimated to be approximately up to £11,695,906 less expenses of £110,295.

For more information about related Opportunities and Key Players visit West Africa Projects


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