IMO to place £400,000 stock

IRISH Marine Oil (IMO) plans to raise up to £400,000 in a placing of new shares. The shares will be placed with a few British investors, according to industry sources. Those institutions will end up with a sizeable minority holding, almost 20 per cent, in the enlarged group.

IMO, chaired by Dr John Teeling, has changed its focus, from being a gold exploration company in Ireland to oil and gas exploration overseas, mainly in South America. The new funds will be used to further develop the group's operations in South America.

One of its main areas for exploration is Bolivia. However, recent changes to the country's hydrocarbon legislation, have impacted heavily on around 40 existing companies which, like IMO, had signed heads of agreement but had not commenced work on their blocks. IMO has to re apply as its Ixiamas block is larger than 500,000 hectares.

IMO and its partner Pan Andean have re applied for the block. While the application is being processed, all farm out negotiations have ceased. However, IMO is confident it will be successful or for that block and/or another block in Bolivia.

IMO had the opportunity to acquire a 25 per cent stake in 59 producing wells, along with a deep exploration gas play. Although negotiation took place, the parties could not agree to a price. Dr Teeling said: "We could value the cash flow from the existing wells, but could not agree on the premium to be paid to participate in the deep exploration play."

Discussions, however, are continuing on a third project in Bolivia. IMO and two partners have offered to take over the block and the commitments.

The group is now looking at other areas outside Bolivia. While it has examined and discarded prospects in Paraguay and Peru, other ventures are currently being considered.

The latest results from IMO showed a drop in the loss before tax from £8,895 to £6,976. Net assets have fallen from £49,420 to £42,242. However, reflecting its exploration activities, the accumulated deficit in the profit and loss account has widened from £2,932,379 to £2,939,557.