Winchester Energy (ASX: WEL) will raise $6.4 million to fast-track its exploration and production activity in Texas’ Permian Basin.
The company has received firm commitments to from institutional and sophisticated investors for its placement of 128 million shares at $0.05 each – which represents a 14% discount to Winchester’s 10-day volume weighted average price.
Winchester is producing from its Mustang field and the discovery well within the Lightning prospect.
As a result, Winchester claims it is positioned to “significantly and systematically build oil production”.
The company is now planning to increase development drilling and cashflow while maintaining its ongoing exploration program.
“Following recent drilling success at the Mustang oil field and the exciting new Lightning prospect discovery, Winchester has recorded increases in oil production to an average of 506 gross barrels of oil per day – resulting in a significant increase in revenue, as announced on 4 November 2019,” Winchester managing director Neville Henry said.
He added he looked forward to putting the placement proceeds to work over the coming months.
Earlier this month, Winchester revealed it had achieved the record 506bopd from its 17,266-acre leases in the Permian Basin.
The company’s working interest from this was 381bopd, which is a 700% increase on its rate of 50bopd back in April.
Revenue for the September 2019 quarter was $1.24 million.
At the 100%-owned Lightning prospect, Winchester plans to spud its second well – McLeod 17#1 following from the Arledge 16#2 discovery well.
At McLeod, Winchester will target the same Cisco Sands as Arledge and anticipates it will increase production from the prospect area.
Over at the Mustang prospect works on the fourth well White Hat 20#4 are underway, with fracking of the well expected in early December and a further three wells lined up for drilling in the near-term.
Meanwhile, with more than 20 prospects in its inventory, Winchester plans to drill the Spitfire and El Dorado prospects as soon as it can.
By early afternoon, shares in Winchester were up more than 5% to $0.059.