San Leon Energy to raise €70m in share offering

LISTED OIL and gas explorer San Leon Energy intends to raise €70 million through a share placing to fund drilling and repay part of its debt.

The company announced yesterday that it had agreed terms for a conditional placing of 313.3 million new shares.

The placing will raise £59.6 million sterling (€70 million) and the shares will be priced at 18p each.

San Leon said the cash would be used to fund an extensive seismic and drilling programme over the next 18 months.

In particular, the exploration company intends to use the funds to pay its share of the costs of planned drilling programmes in Poland where it is a partner in oil and gas licences with Talisman Energy, and in Morocco, where it has a series of oil and gas licences.

It will also carry out seismic tests on its prospects off the Albanian coast and review the data it gathers in preparation for bringing a new partner into the project through a farm-out deal.

Seismic tests are used to determine the shape of rock formations and other geological features that indicate the presence of oil and gas deposits.

Along with this, the company intends to repay £2.5 million in convertible debt and to fund general corporate costs.

The new shares amount to 76 per cent of San Leon’s issued capital and, after the placing, will account for just over 43 per cent of the company.

Chairman Oisín Fanning said that demand for the new shares was high from existing shareholders and new institutional investors in Europe and America.

He added that the company’s focus for the next 18 months would be on commercialising the portfolio of exploration prospects it has established over the last two years.

“The funds raised will support this stage of our growth strategy as we fast-track the drilling of up to 17 wells in the next 18 months in Poland and Morocco,” Mr Fanning said.

San Leon is listed on London’s Alternative Investment Market. Its assets are in Poland, Ireland, Morocco, Albania, Italy and the Netherlands.

Last month, its accounts for the first half of 2010 valued these at close to €68 million. Earlier this year, it bought Island Oil and Gas for €14.3 million and raised about €6.3 million to cover general operating costs.

It lost €1.7 million in the first half of this year, according to its interim accounts.