Australis Oil & Gas has gone into a trading halt to raise up to $40 million via a placement to help fund a proposed $US100 million drilling program over its emerging shale play in the south-east US.
The Perth-based company gave away little in its announcement.
However, it told investors in a presentation last week that it would consider raising new equity as part of a funding package for the drilling program, which is expected to see up to 10 wells sunk over its Tuscaloosa Marine Shale properties in the second half of the year.
It is believed that debt will account for most of the funding for the drilling.
Australis is one of the biggest landholders in the TMS, which straddles Louisiana and Mississippi, after paying $US80 million for a swathe of holdings early last year.
The company already produces small amount of oil — about 4 million barrels a year — from the region but the new drilling would enable it access more of the estimated 145 million barrels of recoverable oil sitting under its tenements.
While Australis and its advisers from Euroz have to yet to finalise the quantum or the price of the equity raising, it is believed the company will issue up to the allowable 15 per cent of its issued capital.
Shares in Australis last traded at 36¢, valuing the group at $280 million.
Run by the management team behind Aurora Oil & Gas, which was bought by Canada’s Baytex Energy for $1.8 billion in 2014, the company has taken a long-term cyclical view, accumulating properties in the TMS that can be developed and sold on the back of stronger oil prices.
Australis is chaired by former Aurora chief Jon Stewart, with Ian Lusted as managing director and Graham Dowland as finance director.
Its shareholders including many Aurora investors who are betting the management team can repeat their success with Australis.