AED to launch share purchase plan
AED Oil Limited (ASX: AED) is undertaking a capital raising via a Share Purchase Plan (SPP), which will allow eligible shareholders holding shares on the record date of Monday 21 March 2011 to purchase shares in AED to a maximum of A$15,000 at an issue price of $0.24 per share, without brokerage or transaction costs. The purchases can occur in increments of $1,000.
This offer will be made to eligible shareholders at a 14.3% discount to the last closing price on 21 March 2011. This discount is reflective of similar pricing to other recent share purchase plans in the market and follows on from AED’s recent convertible note transactions, and will allow eligible shareholders to participate in AED’s capital management initiatives. The discount takes into account ASIC requirements on the maximum offer price and, as such, gives shareholders the benefit of recent volatility in the global and local equity markets.
Maximum offer size and use of funds
AED can issue up to 60.3 million shares as part of the SPP pursuant to ASX Listing Rule 7.2. Accordingly, at an issue price of $0.24, AED can raise a maximum of $14.4 million (before costs). Funds raised under the SPP will be used for some or all of the following:
1. Contributing towards funding AED’s Brunei exploration and development programme and AED’s Phase 2 exploration commitments, and in particular AED’s follow-up testing at Lempuyang-1 and testing at Lukut-1;
2. Strengthening our balance sheet, having regard to upcoming put dates on AED’s 9% convertible notes listed on SGX-ST (the outstanding principal in respect of these notes is approximately US$12.1 million);
3. Funding of exploration activities in relation to AED’s Indonesian and Australian projects; and
4. General working capital requirements.
As set out in AED’s most recent half year accounts (released last week), as at 31 December 2010 AED’s cash, cash equivalents and other financial assets totalled approximately $39.5 million. Outgoings since that date include approximately US$8.6 million in repayments of principal on AED’s 9% convertible notes listed on SGX-ST, and expenditures on AED’s ordinary operating activities. Funds received under the SPP will supplement AED’s current cash position.
Upcoming corporate events
Eligible Shareholders will have the opportunity to increase their investment at a discount, prior to the following upcoming developments expected to occur over the next few months:
1. The completion of further testing at Brunei Block L – it is now anticipated that testing of Lempuyang-1 will recommence towards the end of this month, followed by testing at Lukut-1;
2. Potential extension of the expiry date for the Rombebai production sharing contract, which if granted would allow AED Oil’s subsidiary to recommence farm-out discussions with interested parties and move to the operations phase for that asset;
3. Receipt of results from 3D seismic which was recently shot for Puffin field on AC/P22; and
4. Reassessment of production potential from the Puffin Horst following the significant increase in oil price.
The Joint Venture partners in Block L, Brunei are proceeding with the Phase 2 exploration program. This two year exploration period commenced in August 2010; the production sharing contract for Block L anticipates that the minimum work program for Phase 2 will result in the:
1. acquisition and processing of at least 500 kilometres of onshore 2D seismic data and 500 kilometres of offshore 2D seismic data;
2. acquisition and processing of at least 150 square kilometres of offshore 3D seismic data or the dollar equivalent amount of 2D seismic data; and
3. drilling of two onshore exploration wells, each to a minimum depth of 2,000 metres.
AED is presently preparing a more detailed work plan to fit with the interpreted results from testing.
AED is now positioned to capitalise on its recent significant investment in Brunei through testing and further development, and continuing to assess and appraise opportunities in Indonesia and Australia.
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AED has appointed E.L. & C. Baillieu Stockbroking Ltd to act as Manager & Broker to the SPP.
A written offer document containing the terms and conditions of the SPP will be issued on ASX today and mailed to shareholders in the coming days. The key dates for the SPP are set out in the annexure.
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