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Desire Petroleum plc.
Proposed Placing of 35,555,556 Placing Shares at 45p per share and Open Offer of 20,335,100 Open Offer Shares at 45p per share on the basis of 1 Open Offer Share for every 8 Existing Ordinary Shares.
?Desire to raise up to £25.15 million via a Placing and Open Offer.
?3D-seismic survey identifies drilling targets with a potential to discover over one billion barrels of recoverable oil in Tranches C and the North Falkland Basin.
?Preparations for a three-well drilling programme in Tranches C and D underway.
?Terms agreed with Rockhopper Exploration (Oil) Limited to farm-in to the three-well programme to earn an interest of up to 15% of Tranches C and D by funding up to 30% of the costs of the programme.
?Qualifying Shareholders entitled to apply for more than their entitlement to shares under the Open Offer.
Dr Colin Phipps (Chairman) commented:
"I am pleased that Desire is now preparing to drill the major objectives identified by 3D-seismic survey and I am delighted that we shall be working with Dr Pierre Jungles, a most distinguished oilman whom I have known for many years, and his colleagues at Rockhopper."
Introduction Your Board indicated in the announcement dated 15 December 2004 that, in addition to a potential farm-out of Desire's interests in Tranches C and D in the North Falkland Basin ("Tranches C and D"), a fundraising was also in contemplation.
Your Board is now pleased to announce that, following the results of the 3D-seismic survey carried out in 2004, the Company is preparing a programme to drill three wells in Tranches C and D to test prospects which the survey identified as having the potential to hold over one billion barrels of recoverable oil. The Company has also agreed terms with Rockhopper Exploration (Oil) Limited ("Rockhopper"), a company to be chaired by Dr Pierre Jungels, with oil interests in the North Falkland Basin, whereby Rockhopper will earn up to a 15 per cent. working interest in Tranches C and D by funding up to 30 per cent. of the costs of a three-well drilling programme. Desire intends to raise further funds towards the remaining costs of the proposed three-well drilling programme by way of the Placing and the Open Offer.
The principal reasons for the fundraising are as follows: (b) at the Issue Price a fundraising to cover non-farmed-out drilling costs is likely to be less dilutive of Shareholders' interests than is a larger farm-out, even for Shareholders who do not take up their entitlements in the Open Offer; (c) the ability to drill for its own account allows the Company to proceed more rapidly to commission a rig and greatly increases the likelihood of commencing a drilling programme in 2005. With the strengthening of the crude-oil price, there has been a concomitant increase in exploration drilling activity, leading to increasing rig rentals and decreasing rig availability. Accordingly, the sooner the Company can enter the rig market, the better the prospects of an early drilling campaign. Furthermore, although the farm-out process is likely to cause delay to the drilling timetable, if a rig has already been secured this should benefit any additional farm-out partners. Accordingly, the Company commissioned a survey of world-wide rig availability which has identified a number of suitable units available for drilling in the North Falkland Basin towards the end of 2005.
A rig contract tender document is being prepared with a view to being sent to the owners of all of these units and preparations for a three-well drilling programme are already underway. Whilst it is your Board's intention to continue its discussions with other potential farm-in partners, the current fundraising will give the Company greater flexibility in negotiating both the size and terms of any farm-out participation in addition to Rockhopper's. Should there be an additional farm-out, the Company, as a result of the current fundraising, will then be in a position, either to fund additional drilling on Tranches C and D, or to drill on its own account in Tranches I and L in the North Falkland Basin, in which the Company still holds a 100 per cent. interest. Principal terms of the Placing and the Open Offer The Company proposes to issue up to 35,555,556 Placing Shares and 20,335,100 Open Offer Shares at the Issue Price which, assuming the Open Offer is fully subscribed, will raise in aggregate approximately £25.15 million for the Company (before expenses).
Seymour Pierce has fully underwritten the Placing. Qualifying Shareholders are invited to apply for Open Offer Shares at the Issue Price on the basis of: 1 Open Offer Share for every 8 Existing Ordinary Shares registered in their name on the Record Date (10 February 2005) and so on in proportion for any other number of Existing Ordinary Shares so registered. Qualifying Shareholders may apply for their pro rata entitlement, less than their pro rata entitlement, or their pro rata entitlement together with any further number of Open Offer Shares. Where appropriate, the entitlement of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares and any fractional entitlements will be aggregated and sold, if required, for the benefit of the Company to satisfy excess applications. The Placing Shares and the Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares of the Company and will, once allotted, rank in full for all dividends and other distributions declared, made or paid on the share capital of the Company in respect of the period after such allotment. Directors' and Certain Shareholders' Intentions Phipps and Company Limited, a corporate Shareholder in which Stephen Lawrey Phipps is a shareholder and director has undertaken to subscribe for 555,556 New Ordinary Shares which, at the Issue Price, represents a cash subscription of approximately £250,000; Walter Ian Logan Forrest intends to subscribe for 11,112 New Ordinary Shares which, at the Issue Price, represents a cash subscription of approximately £5,000; The spouse of Dr Ian Gordon Duncan intends to subscribe for 11,112 New Ordinary Shares which, at the Issue Price, represents a cash subscription of approximately £5,000. Extraordinary General Meeting 1. to increase the authorised share capital of the Company from £2,500,000 to £4,000,000 by the creation of 150,000,000 New Ordinary Shares; 2. to authorise the Directors to allot, inter alia, Ordinary Shares pursuant to section 80 of the Act, sufficient to satisfy applications under the Placing and the Open Offer and otherwise up to an aggregate nominal value of £730,000; and 3. to disapply the statutory pre-emption rights set out in section 89 of the Ac to enable the New Ordinary Shares to be allotted, and to authorise the Directors to allot certain further Ordinary Shares and other issues of Ordinary Shares for cash pursuant to section 95 of the Act up to a nominal value of £218,000. Expected Timetable of Principal Events: Record Date for the Open Offer 10 February 2005 Prospectus published 14 February 2005 Latest time and date for splitting Application Forms to satisfy bona fide market claims under the Open Offer 3.00 p.m. 4 March 2005 Latest time and date for receipt of Form of Proxy 10.00 a.m. 8 March 2005 Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer 3.00 p.m. on 8 March 2005 EGM 10.00 a.m. on 10 March 2005 Admission effective and dealings commence in the New Ordinary Shares on AIM and (where applicable) CREST stock accounts expected to be credited 8.00 a.m. on 11 March 2005 Despatch of definitive share certificates for New Ordinary Shares no later than 18 March 2005 Contacts: Colin Phipps, Chairman: 020 7409 2138 Ewan Leggat, Seymour Pierce Limited: 020 7107 8000 This attach information is provided RNS.
The company news service from the London Stock Exchange.
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