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RNS Number : 0873X
Andes Energia PLC
26 August 2015
 

 

26 August 2015

 

Andes Energia plc

("Andes" or "the Company")

US$9 million fundraising and US$10 million share issue in respect of debt cancellation

 

 

The Board of Andes (AIM: AEN; BCBA: AEN) is pleased to announce the following:

 

·    US$9 million (approximately £5.8 million) (gross) to be raised through a placing (the "Placing") and direct subscription (the "Subscription", together with the Placing the "Fundraising") of in aggregate 23,047,376 new ordinary shares of 10 pence per share ("Ordinary Shares") at a placing price of 25 pence per new Ordinary Share, with or by existing and new investors;

·    US$10 million cancellation of an existing bond satisfied by the issue of new Ordinary Shares at a price of 25 pence per new Ordinary Share (the "Conversion");

·    Net proceeds of the Placing will be used to part finance the Company's 2015/2016 drilling programme principally in the Chachahuen area in Argentina comprising:

participation in the drilling of up to 78 low cost wells;

30 workovers in conventional producing development; and

310km2 3D seismic programme to identify additional well targets;

·    Targeting a doubling of production from the Chachahuen area in Argentina.

 

Alejandro Jotayan, CEO of Andes Energia commented:

"The Board of Andes is delighted to announce that existing and new shareholders have supported the Company in this fundraising which allows us to develop our high quality portfolio at a faster rate.

"With our high quality and flexible portfolio, which includes a significant exposure to the Vaca Muerta world class shale play and a diversified production base in South America, we are well positioned to take advantage of the favourable market environment in the countries where we operate, such as Argentina where the official crude oil price is US$77 per barrel. 

"The net proceeds of the fundraising will be used to finance a significant part of our active 2015/2016 work campaign which commences in Q3 2015 and includes the drilling of 78 wells on our conventional assets as we focus on growing our production portfolio substantially, targeting an additional 5,000 boepd gross (1,000 boepd net)."

Background to the Fundraising

 

Andes is a South American focused oil company with one of the largest acreage positions in the Vaca Muerta shale owned by a public independent company and a strong production growth record in its conventional plays in both Argentina and Colombia.

 

The Company holds a land position of over six million net acres throughout Argentina, with 19.1 million barrels of oil equivalent ("MMBOE") of 2P reserves, over 640 MMBOE of resources, and a privileged position in Vaca Muerta, Agrio and other unconventional shale plays in the Country.

 

Andes is currently producing c.1,950 barrels per day in Argentina from five main producing licences (Chachahuen, representing approximately 50 per cent. of the Company's production from Argentina, Chañares Herrados and Puesto Pozo Cercado, Vega Grande, La Brea and El Manzano) with strong growth in production expected in the near term targeting c.3,000 barrels per day through its aggressive drilling campaign in Chachahuen, the development of the La Paloma and workover campaigns in Vega Grande, La Brea, El Manzano and Chañares Herrados.

 

Vaca Muerta is the world's third largest shale resource and the only oil producing shale outside of North America (currently, producing 45,000 boepd). Andes is partnered with YPF S.A. ("YPF") in four of its six licences in the region. Mata Mora, one of Andes's key Vaca Muerta licences, is located in close proximity to the most active region in the Vaca Muerta shale which accounts for over 70% of the wells drilled to date.

 

In Colombia, Andes is also in discussions with a third party which may result in a collaboration agreement to develop the licences held by its 51% owned subsidiary Interoil Exploration and Production ASA ("InterOil"), which could result in the disposal of part of Andes's interest in InterOil and/or in a farm-out of some InterOil assets.

 

Use of proceeds

The net cash proceeds of the Fundraising will fund primarily over the next 12 months part of the US$22 million work programme for the Chachahuen area in Argentina. The net cash proceeds of the Fundraising are expected to be invested in developing production from this licence alongside Andes's partner YPF. The balance of the funds required to complete the proposed work programme are expected to come from the Company's cash flow and existing cash resources and facilities.

The work programme comprises:

-     participation in the drilling of up to 78 low cost wells in Chachahuen in Argentina;

-     30 workovers in conventional production development; and

-     a 310km2 3D seismic programme to identify additional well targets.

 

Details of the Fundraising

 

Andes is raising US$9 million (approximately £5.8 million) (gross) through the issue of 23,047,376 new Ordinary Shares, pursuant to the Fundraising, at a placing price of 25 pence per new Ordinary Share with existing and new investors. The Placing has been arranged by Westhouse and GMP Europe.

 

 

 

Partial cancellation of bond

The holders of an existing US$25 million bond, which with accrued interest now totals US$31 million, have agreed to cancel US$10 million of the liabilities outstanding under the bond in consideration for the issue of 25,608,196 New Ordinary Shares at a price of 25 pence per new Ordinary Share. Following the part cancellation of the bond, the Company's corporate gross debt (excluding debt of subsidiary companies) will be approximately US$47 million. Warrants are not being issued in connection with the Ordinary Shares to be issued as a result of the Conversion.

Extension of US$5 million debt facility

Further to the announcement on 9 February 2015 in relation to a US$5 million debt facility (the "Facility") from Mercuria Holdings (Cyprus) Limited ("Mercuria"). Mercuria have provided to the Company a letter indicating their intention, subject to certain conditions, to extend the Facility for a further 12 months, to February 2017.

Application for Admission and Total Voting Rights

Application has been made for the 48,655,572 new Ordinary Shares to be issued pursuant to the Fundraising and Conversion to be admitted to the AIM Market of the London Stock Exchange ("AIM") and it is expected that admission will take place and trading in the new Ordinary Shares will commence from 8.00 am on 28 August 2015 ("Admission").

Following Admission (but prior to exercise of any Warrants), the Company's issued share capital will consist of 600,639,123 Ordinary Shares, with each Ordinary Share carrying the right to one vote and there are no Ordinary Shares held in treasury. This figure above may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

 

Ends

 

For further information please contact:

 

Andes Energia plc

Nicolas Mallo Huergo, Chairman

Alejandro Jotayan, CEO

Billy Clegg, Head of Communications

 

T: +54 11 4110 5150

 

T: +44 20 3757 4983

Joint Brokers



Westhouse Securities

Antonio Bossi

David Coaten

 

T: +44 20 7601 6100

GMP Europe LLP

Rob Collins

Emily Morris

 

T: +44 20 7647 2800

Macquarie Capital (Europe) Ltd

Jon Fitzpatrick

Fergus Marcroft

Guy de Freitas

 

T: +44 20 3037 2000

 

Media Enquiries



Camarco

Georgia Mann

 

T: +44 20 3757 4986

 

Note to Editors:

Andes Energia plc is an oil and gas exploration and production company focussed on onshore South America with a market capitalisation of circa £155m. The Company has its main operations in Argentina and Colombia.

 

The Company has approximately 25MMbbls of conventional 2P reserves, and it also has certified prospective resources of 640MMboe, primarily in the Vaca Muerta unconventional development in Argentina and over 7.5 million acres across South America.

 

The Company has approximately 250,000 net acres in the Vaca Muerta formation, which is the second largest shale oil deposit in the world and the only producing shale oil deposit outside of the USA, currently producing 45,000boepd. Over 300 wells have already been drilled and fracked in the Vaca Muerta formation.

 

Andes is the only AIM quoted company on the London Stock Exchange with exposure to the Vaca Muerta shale.

 

The Company currently produces approximately 3,250 bbls per day in Argentina and Colombia from 6 conventional fields in Argentina and 2 in Colombia, with positive cash flows generated.

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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