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Oilex Ltd

  • BY: Andrew Hore |
  • POSTED: 08/07/2015 |

India-focused oil and gas company Oilex Ltd is raising A$30m ($23m) via a placing and rights issue at a one-third discount to the ASX suspension price. 

However, the shares were not suspended on Aim so the price had already dropped to 2.13p.

Most of the placing shares are being issued at the equivalent of 2p a share, although some are being sold for 2.04p a share. The higher price is being paid by Bermuda-registered Zeta Resources, which is taking a 19.6% through the placing. Zeta is 85%-owned by Utilico Investments, which also owns 50% of Oilex’s broker Westhouse.

The placings will raise just over £11m, while the one-for-four rights issue will raise £3.4m at 2p a share. Shareholder approval is required to increase the number of shares that can be issued.

The fundraisings will provide the cash Oilex requires to develop its assets in the Cambay basin. There are plans for two horizontal wells and five workover wells. There are also plans to hook up existing wells. Gujarat State Petroleum Corporation is Oilex’s partner and it owns the local transmission grid network so there is a ready market for the gas in particular.

Westhouse estimates that this work should enable production that will generate revenues of $14m a year making the assets cash flow positive. That is why management is willing to issue so many shares and dilute existing shareholders.

Oilex has 20mmboe of 2P reserves and a further 80mmboe of 2C contingent resources.

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