XCD Energy (ASX: XCD) has received commitments to raise $2 million by way of a two-tranche placement to advance its Alaskan oil project and launch a farm-out campaign.
The onshore oil junior emerged from a trading halt this morning to announce the details of the placement.
Tranche 1 will be made using the company’s existing placement capacity to raise about $500,000 (before costs) through the issue of 48 million shares at $0.01 per share and 24 million free attaching options.
Tranche 2 aims to raise about $1.5 million (before costs) through the issue of up to 152 million shares at $0.01 per share and 76 million free attaching options.
The free attaching options are being issued on a ratio of one option for every two fully paid shares subscribed for and will be exercisable at $0.02 per option with a three-year expiry.
XCD said it will seek shareholder approval to conduct the second tranche placement on or around 29 November.
XCD said it anticipates having about 700 million shares on issue and around $3.2 million in cash following the completion of the placement.
Proceeds will mainly be used to advance Project Peregrine and kick off a farm-out campaign for the company’s wholly owned 149,590 acreage position in Alaska.
“It is pleasing to get the continued support of existing shareholders as well as welcome new shareholders into this capital raise that will provide the company the funding to pursue its near-term objectives,” XCD managing director Dougal Ferguson said.
Innovative drilling options
Speaking with Small Caps, Mr Ferguson said the farm-out campaign is expected to be launched in late 2019.
“We’re intending to have the data room up and ready for other parties by the end of the year,” he said.
In addition to the farm-out campaign, Mr Ferguson said funds from the placement could help advance a “low-cost drilling opportunity at Project Peregrine that, if successful, could result in the timeframe to drilling being significantly reduced.”
“The company is investigating the option of using innovative drilling options that would not only be significantly cheaper than traditional methods but could result in the drilling being done much quicker than the market is currently expecting.”
“This may actually allow us to drill, potentially, during next northern summer, which is July to September next year,” Mr Ferguson said.
“There are still a few hurdles but it’s something that we are looking into and could add a lot of value,” he added.
Prospective resource report
Over the past few months, XCD has been busy firming up its oil project on Alaska’s North Slope, Project Peregrine.
In a market update earlier this month, the company announced its Integrated Nanushuk Technical Regional Overview, or INTRO project, on the oil leases is nearing completion.
This work has been a core component of an independent prospective resource report, which is being undertaken by ERC Equipose and is expected to be completed in “late October”.