Granby Oil and Gas plc, the oil and gas exploration and production company with interests in the UK North Sea and the Philippines, is pleased to announce the placing by KBC Peel Hunt Ltd of 10,714,286 ordinary shares of 0.5p (“New Ordinary Shares”) at a price of 84p per share to raise £9,000,000 (approximately £8,640,000 after expenses). The New Ordinary Shares have been placed with certain institutional and other investors, including Directors.
Reasons for the placing and use of proceeds
The proceeds will be used to:
• Secure rig slots for both development and exploration drilling, which often requires the ability to make decisions and demonstrate financial capacity at short notice
• Fund Granby’s share of the costs of the Tristan project, announced on 2 August 2006, including an equity contribution of approximately £0.75m and up to approximately £2.5m of additional commitments which need to be made prior to funds becoming available to draw down from the financial partner, at which time these commitments will be re-financed on a non-recourse basis
• Fund Granby’s share of the Galoc project, full approval of which is expected shortly. Granby will make an equity contribution of approximately £1.2m towards the Galoc project. Granby will provide guarantees for recourse debt and completion support of approximately £3.3m from its existing resources. The remainder of Granby’s contribution to the project will be funded by non-recourse project finance debt.
The net funds raised, together with existing cash resources which totalled approximately £7.254 million at 31 March 2006, will be sufficient, in the opinion of the Directors and on the basis of current estimates, to fund the exploration and development programme and to cover the Company's overheads at least until the expected commencement of material cashflows from the Tristan and Galoc developments during 2008.
Further details of the placing
Application will be made to London Stock Exchange plc for the New Ordinary Shares to be admitted to trading on AIM. Admission of the New Ordinary Shares is expected to become effective on 7 September 2006, subject to shareholder approval at an Extraordinary General Meeting (“EGM”) on 6 September 2006.
The New Ordinary Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing ordinary shares, including the right to receive all dividends and other distributions declared or paid thereon following admission.
The placing is conditional upon the placing agreement between KBC Peel Hunt Ltd and the Company having become unconditional in all respects and not having been terminated prior to admission of the New Ordinary Shares, and admission of the New Ordinary Shares becoming effective by 9am on 7 September 2006 or such later date (not being later than 30 September 2006) as the Company and KBC Peel Hunt may agree.
David Grassick, Managing Director of Granby Oil and Gas, said:
“The proceeds of this placing will provide us with the necessary funds to bring our two development projects to fruition and to accelerate our planned exploration programme through improved access to the rig markets.”