Circle Oil raises £41m through share placing

LIMERICK-BASED exploration company Circle Oil has raised about £40.6 million (€48.9 million) in fresh capital to expand its operations.

Close to 142 million ordinary shares in Circle Oil, which has oil and gas exploration interests in Africa and the Middle East, have been placed with new and existing investors at a price of 30 pence per share.

This represents a discount of 6.25 per cent to the closing price on August 2nd.

The funds raised will be used to speed up the company’s growth by funding capital expenditure programmes in Morocco and Egypt as well as new ventures in its core locations.

The market reacted positively to news of the successful share placing, and Circle Oil’s price jumped almost 4 per cent to 33.25 pence on London’s AIM market.

Brokers were upbeat about the company’s future prospects, with Davy stockbrokers predicting that the stock should “trade ahead” now that the requirement for funding has been removed from investors’ horizons.

The “relatively modest” discount applied to the share placing reflects the underlying quality of a number of Circle Oil’s assets, and its focus on “conversion of discovery to cash flow as soon as possible”, it said.

The company aims to achieve a net production of more than 10,000 barrels of oil equivalent per day over the next three years.

Commenting on the share placing, chief executive Chris Green said that the fresh funds will allow Circle Oil to accelerate its activities.

It is now well-positioned to take advantage of new opportunities in the regions in which it operates, he said.

“I believe this marks the beginning of a new period of growth for Circle Oil,” he added.

The “placing” shares will represent about 25.4 per cent of Circle Oil’s enlarged ordinary share capital once they are admitted for trading on the AIM.