FAR Ltd is pleased to announce a fully-underwritten placement to institutional and sophisticated investors to raise approximately $80 million before expenses by issuing 1,000 million shares (Placement). The proceeds from the Placement (after costs) will be used to fund FAR’s continued participation in the drilling, evaluation and pre-development program offshore Senegal, the anticipated acquisition and exploration of Blocks A2 and A5 in The Gambia, and general corporate purposes.
The Placement price of 8.0 cents per share represents a 4.8% discount to FAR’s last close share price at 4 April 2017 of 8.4 cents and a 3.5% discount to the volume weighted average share price for the 5 trading days ended 04 April 2017.
Upon completion of the Placement, the Placement shares will represent approximately 18.3% of the enlarged share capital of the company, which will have 5,461,532,458 ordinary shares on issue. The Placement shares, when issued, will rank equally in all respects with the existing ordinary shares.
The shares will be issued in two tranches:
• The first tranche to raise approximately $54 million is unconditional and settlement is expected to occur on Monday, 10 April 2017 with normal trading to occur on Tuesday, 11 April 2017.
• The second tranche for the balance of approximately $26 million is subject to ASX Listing Rule 7.1 shareholder approval that is intended to be considered by shareholders at a General Meeting, which is expected to be held on or around Monday, 15 May 2017. Settlement of the second tranche is expected to occur on Thursday, 18 May 2017 with normal trading to occur on Friday, 19 May 2017.
Credit Suisse is acting as Financial Adviser to FAR, and the Placement is being underwritten by Credit Suisse and RBC Capital Markets as Joint Lead Managers.
The Trading Halt shall remain in place until further notice.
VR-1 well update
Following the successful appraisal of the primary target Albian sandstone reservoir in the SNE oil field offshore Senegal, the VR-1 well was deepened to a total depth of 3,899m to evaluate a secondary objective – an exploration target in the underlying Aptian carbonate.
FAR’s preliminary interpretation of the well data provided by wireline logging and sampling in the Aptian carbonate section of VR-1 has encountered indications of hydrocarbons near the base of the well. Further work is ongoing to characterise the interval. FAR’s preliminary assessment of the data indicates that the hydrocarbons are not commercially significant.
VR-1 is the 8th successful well drilled offshore Senegal and has confirmed the following in SNE:
• A 97m gross oil column with greater than expected net pay, and the thickest net pay of all appraisal wells drilled in the SNE oil field to date
• the best lower SNE reservoir properties measured so far in the SNE field, with a greater than expected thickness of key lower SNE reservoir units in the oil column; the 520 reservoir unit had 16m in oil, and the 540 unit had 11m in oil
• drilling is currently 10 days ahead of schedule and significantly ahead of budget Preparations are now underway to complete operations in the hole, plug and abandon as planned and mobilise the drillship to the SNE-6 location.
FAR Managing director, Cath Norman said:
“The results of the VR-1 well have been an overall success as the objectives of the appraisal of the SNE field at this location were met and in some cases exceeded. We see evidence at this stage of hydrocarbons in the secondary target in the limestones but at this stage, FAR’s interpretation is that these are more than likely not of economic significance although interpretation of the wireline logs and samples taken has not been completed. As previously reported, the limestone target was high risk with FAR carrying a 10% chance of success and we look forward now to completing the SNE-6 well and the connectivity measurements across the SNE field as planned.
Because of the efficient drilling in VR-1 and SNE-5 to date, the drilling program is significantly under budget which is a very pleasing achievement by the operations team.
We are also thrilled to raise $80 million at a price of 8c which has been fully underwritten by Credit Suisse and RBC. This represents a 4.8% discount to the share price on closing yesterday and a 3.5% discount to our 5-day VWAP. The modest discount offered and fact that the raise is fully underwritten is testimony to the high quality of the FAR portfolio. The cash raised is expected to fund FAR through the expected work program for 2017 and 2018 in Senegal.”
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