BPH Energy set to raise $3m and fund Advent Energy PEP11 gas drilling program

BPH Energy ASX fund Advent Energy PEP11 gas drilling program
BPH Energy plans to increase its stake in NSW gas explorer Advent Energy from 23% to 36%.

Investment company BPH Energy (ASX: BPH) has gone to the market to raise around $3 million as part of a placement and associated non-renounceable rights issue to help fund ongoing exploration activity at investee Advent Energy’s flagship PEP11 gas project.

According to BPH Energy, its now completed placement consists of issuing 29,987,500 fully paid ordinary shares at an issue $0.015 each (raising $450,000).

It will be supplemented by the rights issue offering holders two shares for every five held to raise a further $2.5 million.

The 30 million newly issued shares mean BPH Energy’s total shares on issue will increase by 8% to over 400 million while the maximum number of shares to be issued has been capped at 161.2 million. At the conclusion of the rights issue, BPH estimates the total number of issued shares in the company to hit its maximum ceiling of 564 million.

Given the fact that the proposed rights issue is non-renounceable, raises the propensity and capacity for long-term investors or existing investors to add to their holdings.

The shares issued under BPH Energy’s placement will carry a holding lock pending completion and lodgement of the disclosure document for the rights issue, the company said.

Also, investors that participated in the placement will automatically be eligible to participate in the rights issue.

Furthermore, BPH’s capital raise will also include a “top-up facility” which allows eligible shareholders to apply for additional shares over and above their entitlements. The company said that additional shares will be allotted to the extent there is a shortfall under the rights issue.

“The company is pleased to receive funding from a range of investors including existing shareholders and others who participated in the placement through Sixty-Two Capital,” said BPH Energy managing director David Breeze.

Use of funds

According to BPH Energy, its prime focus following the circa $3 million capital injection will be its existing investment in Advent Energy, a gas company with prime gas acreage PEP11 in offshore New South Wales.

Just last month, BPH revealed that Advent Energy’s drilling application for PEP11 had undergone NOPTA assessment with a final decision and anticipated approvals said to be “imminent”.

In its most recent market update, BPH said its NOPTA application was is “in the final decision phase” and that it expected to have a final decision “shortly”.

Moreover, after completing a review of historical data, BPH and Advent are hopeful that previous exploration done by Ampolex in the Sydney Basin and Baleen South could be significant.

According to historical records, Ampolex considered Baleen South as one of its major targets with geologic modelling estimating the single structure alone could hold 1.5 trillion cubic feet of estimated reserves.

BPH Energy owns almost 23% of Advent, which in turn holds an 85% interest in PEP11, with ASX peer Bounty Oil and Gas (ASX: BUY) holding the remaining 15%.

Following the capital raise and subject to shareholder approval, BPH Energy intends to raise its stake in Advent from 23% to 36%.

Around $2 million of the newly raised capital is set to be deployed in Advent to progress well planning, engineering and environmental approvals for drilling at the Baleen drill target at PEP11.