Placing of New Ordinary Shares
July 18, 2008
Not for release, publication or distribution in or into the United States, Australia, Canada, the Republic of South Africa or Japan. This announcement is not an offer for sale of securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. The issuer of the shares has not registered, and does not intend to register, any portion of the offering in the United States and does not intend to conduct a public offering of its securities in the United States.
Certain definitions apply throughout this announcement and your attention is drawn to Appendix 2 to this announcement where such definitions are set out in full.
Placing of New Ordinary Shares
Highlights
- US$ 17.3 million fund raising.
- Funds will be used to part finance pipeline construction, field development (well and facilities), exploration activities and general corporate overheads.
PetroNeft Resources plc, 100% owner of Stimul-T, the sole owner and operator of Licence 61, Tomsk Oblast, Russian Federation, is pleased to announce that it has agreed the terms of a conditional placing of 34,527,141 new Ordinary Shares at Stg£0.25 (€0.32) per Ordinary Share (the "Placing Shares"), raising gross proceeds of approximately US$17.3 million ("the Placing").
Use of Funds
The funds will be used in combination with the recently announced US$80 million Standard Bank debt facility to develop PetroNeft's portfolio of 4 proven oil fields and exploration assets contained within Licence 61, Tomsk Oblast, Russia.
Procurement of pipe will begin immediately for the construction of a pipeline in winter 2008/2009 that will allow PetroNeft to monetise its 4 proven oil fields, by moving into production during the second half of 2009.
Current projections for the first two fields, Lineynoye and West Lineynoye, estimate initial production rates of 4,000 barrels of oil per day in 2009, rising to 14,000 barrels of oil per day in 2012.
In addition, the funds will be used to manage field development issues, infrastructure and development costs, ongoing business development and finally general corporate overheads.
The Placing is being executed in two tranches and has been arranged by Davy and KBC Peel Hunt. Under the terms of the Placing Agreement, Davy and KBC Peel Hunt, as agent for PetroNeft, have agreed conditionally to use their reasonable endeavours to procure subscribers for the Placing Shares at Stg£0.25 (€0.32) per Ordinary Share. The first tranche of the Placing consists of a conditional placing of 19,202,239 Ordinary Shares (the "'First Tranche Placing Shares") which is conditional, inter alia, on admission of such Ordinary Shares to trading on the AIM Market of the London Stock Exchange ("AIM") and the IEX Market of the Irish Stock Exchange ("IEX"). The second tranche of the Placing consists of a conditional placing of 15,324,902 Ordinary Shares which is conditional, inter alia, on admission of such Ordinary Shares to trading on AIM and IEX and upon receiving shareholder approval to complete the Second Tranche Placing at an extraordinary general meeting of the Company ("EGM"). A circular to convene such an EGM will be sent to shareholders shortly.
The terms and conditions of the Placing are set out at Appendix 1 to this announcement. The Placing is not being underwritten.
Application will be made to London Stock Exchange plc and the Irish Stock Exchange for 19,202,239 Ordinary Shares or the First Tranche Placing Shares to be admitted to trading on AIM and IEX, with Admission of the First Tranche Placing Shares expected on 22 July 2008. Application will also be made for the Admission of the Second Tranche Placing Shares to trading on AIM and IEX, with admission of the Second Tranche Placing Shares expected on 15 August 2008, subject to the approval of the Second Tranche by the Company's shareholders at the EGM. The Placing Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Admission.
Dennis Francis, Chief Executive Officer of PetroNeft Resources plc commented:
"This marks another major step in PetroNeft's development. Two successful drilling seasons have thus far proved up 4 oil fields and enhanced our understanding of the very significant potential within Licence 61. This progress, and the West Korchegskaya exploration well which spudded last week, means that we are now successfully putting the pieces together to reach first commercial oil production in the second half of 2009.
PetroNeft's ability to source both equity and debt funding in challenging market conditions shows not only the quality of Licence 61, but also the capital markets' confidence in our ability to continue to deliver solid operational progress and exploration success throughout our business.
The commencement of production will represent a major milestone for PetroNeft and an excellent base from which to build a long term Russian oil and gas business."
APPENDIX 1 TERMS AND CONDITIONS OF THE PLACING
For further information, contact:
Dennis Francis, CEO, PetroNeft Resources plc,
+1 713 988 2500
Paul Dowling, CFO, PetroNeft Resources plc
+353 1 4433720
Desmond Burke, Director Investor Relations, PetroNeft Resources plc
+353 52 53226
John Frain/Brian Garrahy, Davy
+353 1 679 6363
Jonathan Marren/Matt Goode, KBC Peel Hunt
+44 207 418 8900
Nick Elwes/Paddy Blewer, College Hill
+44 207 457 2020
Forward Looking Statements
This announcement contains forward-looking statements. These statements relate to the Company's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as 'believe', 'could', 'envisage', 'potential', 'estimate', 'expect', 'may', 'will' or the negative of those, variations or comparable expressions, including references to assumptions.
The forward-looking statements in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this announcement.
