Pryme Oil And Gas Limited (ASX:PYM) Funding Secured To Drill Second Turner Bayou Chalk Well
Brisbane, Mar 14, 2011 AEST (ABN Newswire) - Pryme Oil and Gas Limited (
ASX:PYM) (PINK:POGLY) is pleased to advise that it has completed a funding agreement with its major shareholder, Belmont Park Investments Pty Ltd (BPI), to raise A$4.0 million through an unsecured convertible note facility.
The funds will be used to progress Pryme's Turner Bayou Chalk project and, more specifically, to fund the Company's share of drilling costs for the second well in this project. Drilling of the second well is planned to begin in May.
"Turner Bayou is a company making project for Pryme. The mechanical issues encountered with the first Turner Bayou Chalk well have been addressed and an improved well design and completion plan are in place to reduce the likelihood of similar problems with our second well. Based on the geological results of the Deshotels 20-H No.1 well, the Company has generated a development model which provides for up to 30 wells to be drilled in the project. Under this model positive net cash flow for the project will be achieved with the completion of the fourth well; following this the project is expected to be self-funding. The project will transform Pryme into a profitable oil and gas producer," said Justin Pettett, Pryme's Managing Director.
The convertible note facility is in two parts:
- the first tranche of A$2.5 million involves the issue of a A$2.5 million convertible note (Convertible Note 1) which must be fully drawn down by 30 May 2011 and has a term of 12 months following first drawdown. The note may be converted in part or in full into fully paid ordinary shares of the Company at a price of 30 cents per share, and
- the second tranche of A$1.5 million involves a loan from BPI (BPI Loan), which must be drawn down by 30 May 2011. The BPI Loan may, at Pryme's election, be replaced with a A$1.5 million convertible note (Convertible Note 2), subject to such issue falling within Pryme's 15% placement capacity, which it will do if any 15% placement capacity resolutions to be put forward at the Company's forthcoming AGM are passed. Convertible Note 2 has a term of 12 months following first drawdown of funds under Convertible Note 1 and may be converted in part or in full into fully paid ordinary shares of the Company at a price of 30 cents per share.
The key terms of the Convertible Notes and the BPI Loan are outlined below.
"We are confident that Turner Bayou will create great value for the Company and its shareholders and we will keep investors informed as work on the second well progresses," Justin Pettett added.
About Indago Energy Ltd
Indago Energy Ltd (ASX:INK) (OTCMKTS:POGLY) is an Australian listed company engaged in oil and gas exploration, development and production. Indago's project portfolio includes liquid rich producing assets together with substantial oil development and exploration acreage in the United States.
The Company's Exploration and Production focus is on high growth oil and gas projects offering scalability of production, cash flows and reserves. Indago currently has several producing projects together with a significant acreage position. The Company's immediate focus is the development of its Capitola Oil Project located in an active region of the Cline Shale resource play along the Eastern Shelf of the Permian Basin, Texas. The project's core development and exploitation opportunities are shallower multiple "stacked" sandstones and limestones to depths of 7,000 feet which are effectively produced from vertically drilled wells. Indago's value driven model is executed through exploiting shallower, well defined intervals with advanced completion and stimulation technology within known produced oil fields together with exposure to the emerging Cline Shale resource play.
Indago's shares are publicly traded on the Australian Securities Exchange (ASX ticker: INK) and also as American Depositary Receipts on the OTCQX (ADR ticker: POGLY).
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