ADM Energy Plc closes oversubscribed equity raise to support new Nigeria venture
“With plans to drill a new well in Q4 2021, and multiple additional wells thereafter, the Barracuda field has the potential to come on stream later this year and bring significant increases in production volumes and cashflow,” said Osamede Okhomina.
() confirmed it has closed its oversubscribed fundraising to support its new venture in Nigeria, an interest in the development of the Barracuda field.
The placing and subscription offer raised £1.22mln through the sale of 28.71mln new shares priced at 4.25p.
“We are delighted to successfully conclude this oversubscribed fundraise which demonstrates the strength of investor interest and confidence in ADM,” said Osamede Okhomina, ADM chief executive.
READ: ADM invest in Barracuda oil field project
“I would like to welcome all our new investors and thank existing shareholders for their ongoing support and commitment to our strategy to build a portfolio of assets with attractive rewards, with a view to minimising risks where possible.”
On Tuesday, ADM announced a deal to participate in the development of the Barracuda oil field, located in the OML 141 licence area. It is host to an existing discovery and near-term production asset in swamp/shallow waters.
Osamede Okhomina said the transaction provides the company with access to another high-quality asset.
“With plans to drill a new well in Q4 2021, and multiple additional wells thereafter, the Barracuda field has the potential to come on stream later this year and bring significant increases in production volumes and cashflows to the company thereafter,” the ADM chief executive added.
The investment will come as an acquisition of a 51% interest in KONH, which holds an indirect interest in a Risk Sharing Agreement (RSA) for the field. It is expected to complete in the second quarter this year.
KONH holds, through its subsidiary Noble Hill – Network Limited (NHNL), a 70% indirect interest in the rights, benefits and obligations under the RSA relating to the Barracuda area of OML 141.
The RSA represents a type of service contract commonly used in the Nigerian oil and gas industry by which NHNL will be compensated in cash out of profits (calculated based on agreed-upon measures and outcomes) generated from development of the field.
ADM will provide technical and financial support to the investors in NHNL, while the RSA consortium will provide funding for all upcoming capital expenditure and a Competent Person’s Report (CPR).
Following the news, Arden rated ADM Energy shares a ‘Buy’ and lifted its target price on the stock to14p from 10p previously. The broker said the acquisition brings with it new drilling activity later this year and the potential for “significant” production additions.
“Barracuda has four existing wells, and ADM plans to drill a fifth well in order to carry out a flow test in Q4 2021. On success, this well would be brought onto production and a further five wells then drilled,” analysts said.
Based on existing Barracuda data and field analogues, ADM estimates each well could produce at 4 thousand barrels a day (mbbl/d) gross, recovering 73 million barrels (mmbbl) overall from the D-1B reservoir. There is then further potential at other reservoir levels,” Arden also noted.
ADM is also planning Phase 2 development of its producing Aje field, which could drive additional operational activity and new production volumes in 2022, the broker added.
—Updates to include Arden note–
Read More: ADM Energy Plc closes oversubscribed equity raise to support new Nigeria venture