Mako Hydrocarbons (ASX: MKE) has received the support of institutional and sophisticated investors, who have committed to subscribing for A$2.2 million worth of shares as part of a broader A$3.85 million capital raising. The remaining A$1.65 million will be sought from existing shareholders under a partially underwritten Share Purchase Plan.
Proceeds from the raising will supplement the proceeds to be generated from the planned sale of the Provost asset to further develop its technical understanding of the Duvernay Shale and Rock Creek tight sandstone plays, progressing discussions with potential partners for a 2013/2014 drilling program and to meet general expenses.
"We were very pleased with the response we received from the market and there appears to be considerable recognition of the Company's assets and great enthusiasm for its prospects," Mako President & Managing Director Paul Griese said.
Capital raising terms
Both the Placement and Share Purchase Plan will offer shares priced at A$0.11 each. Under the Share Purchase Plan, existing shareholders will have the opportunity to subscribe for up to A$15,000 worth of new shares. This is underwritten to A$1 million, ensuring that Mako will raise at least A$3.2 million. DJ Carmichael is acting as lead manager to the Placement and lead manager and underwriter to the Plan.
Duvernay and Rock Creek focus
Mako continues to position itself to focus on the Duvernay and Rock Creek plays having decided in late November to sell its non-core Provost heavy oil project. While Provost remains a commercial asset that provides the Company with over C$200,000 of net revenue each month, it was not considered to be a fit with its focus on liquids rich resource development plays.
The Company is currently also participating in its first Duvernay well on its on its Rimbey, Alberta, acreage. Operator Black Swan Energy is drilling the well as a commitment vertical test well to a planned depth of 3,300 metres. The well is being drilled at no cost to Mako, which retains a 10% working interest in the well.
The Duvernay Shale is an emerging world class liquids rich resource play that is the source rock for most of the conventional oil fields in Alberta that has recently attracted the attention of companies such as ExxonMobil (NYSE:XON).
It came to prominence in 2010 and 2011 when more than C$2 billion was spent in land auctions for mineral rights and is widely considered to be analogous to some of the most prospect U.S. shale plays.
Wells drilled in the Duvernay have production at initial rates ranging from 900 to 1200 barrels of oil equivalent per day with high ratios of valuable natural gas liquids. Recent horizontal wells have yield between 100 barrels and 200 barrels of natural gas liquids for every million cubic feet of gas produced.
Importantly, significant activity has been carried out near Mako's acreage, which de-risks its acreage while giving it a better understanding of what it holds.
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