Empire Energy Group Ltd (ASX:EEG, OTC:EEGUF) has wrapped up a capital raise of A$46.8 million, with significant contributions from Bryan Sheffield and Liberty Energy Inc.
The boost to the coffers is aimed at supporting the drilling and development of the Carpentaria Pilot Project in the Northern Territory's Beetaloo Basin in Australia.
Well set to be drilled
Drills are now poised to start on a 3-kilometre fracture-stimulated horizontal pilot development well in EP187 and further advance the engineering and preparation for installation of the Carpentaria Pilot Project's surface facilities.
Empire Energy anticipates the start of commercial production and gas sales by 2025.
The strategic funding initiative also ensures that all of Empire’s Northern Territory exploration permits remain free of royalties, aside from those to the Northern Territory Government and traditional owners.
Strong investor support
Empire says it has received binding commitments for a two-tranche placement of new fully paid ordinary shares to raise A$39 million, with strong support from existing and new institutional and sophisticated investors, who picked up shares priced at A$0.16 each.
Blue Ocean Equities Pty Limited and Morgans Corporate Limited served as the joint lead managers for the transaction.
Bryan Sheffield, through his US-based private equity firm Formentera Partners, and Liberty Energy demonstrated their commitment to the company and their confidence in the Beetaloo Basin by each investing around A$7.7 million (US$5 million) in the placement.
Additionally, Daly Waters, a subsidiary of Formentera Partners, and Liberty Energy have each independently purchased a 2.25% royalty interest in the Empire's EP187 permit area for US$2.5 million each, contributing a further A$7.7 million to Empire's funds.
Approaching inflection point
Empire's managing director Alex Underwood said: "The Empire team is delighted to have received the support of key US strategic investors in the Beetaloo Basin, alongside investments from new and existing institutional and sophisticated investors under the placement.
"Bryan Sheffield and his team have an outstanding track record of value creation in the US shale sector, and they have made significant investments across the Beetaloo Basin. The strategic alignment being created through Bryan’s further investments announced today will be of material value to Empire’s shareholders.
"Liberty Energy is one of the largest providers of hydraulic fracture stimulation services in the US shale market and they will soon be sending a large frac spread to Australia to service the nascent Beetaloo Basin.
"Liberty also offers industry-leading subsurface engineering services to help their customers ‘spiral up’ from data to value. Working with Liberty will facilitate improved well productivity and cost efficiency as we move from the exploration phase into the production phase.
"We are grateful to Bryan and his team, the Liberty team and existing and new shareholders who have participated in this raise for their support.
"The Beetaloo Basin is rapidly approaching a key inflection point which I believe will create substantial value for shareholders.
"We are now well funded to drill, stimulate and flow test our first pilot development well and to progress our field development plans as we aim to commence gas sales in 2025 into the undersupplied Northern Territory market,” he said.
The placement details reveal that a total of 243.75 million shares will be issued at A$0.16 per share, with the first tranche releasing 193,321,700 shares under the company’s existing placement capacity.
The second tranche will require shareholder approval at Empire’s forthcoming Annual General Meeting.