TIDMPANR
RNS Number : 3537M
Pantheon Resources PLC
27 July 2017
27 July 2017
THIS ANNOUNCEMENT, INCLUDING THE APPICES AND THE INFORMATION
CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION
OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR
INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH
RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS
ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE,
NOR IS IT INTED THAT IT WILL BE SO APPROVED.
Pantheon Resources plc
US$12.5 million Proposed Placing
Pantheon Resources plc ("Pantheon" or "the Company"), the
AIM-quoted oil and gas exploration and development company with a
working interest of 50%-58% in several conventional projects in
Tyler and Polk Counties, onshore East Texas, is pleased to announce
a proposed placing to raise approximately US$12.5 million.
Highlights
-- Proposed placing of new ordinary shares of GBP0.01 pence each
in the Company (the "Placing Shares") in order raise gross proceeds
of approximately US$12.5 million.
-- The price per Placing Share will be 43 pence (the "Placing Price").
-- Pantheon is in late stage negotiations to acquire an
additional 25% working interest ("WI") in the VOBM#4 well, as well
as an option to acquire an additional 25% WI in 7,820 mineral acres
surrounding the VOBM#4 well in Tyler County. Whilst negotiations
are advanced, there is no certainty that the acquisition and/or
option will be completed.
-- The proposed cost of acquiring an additional 25% interest in
VOBM#4 is the payment of 40% of the forward costs of drilling the
sidetrack, estimated to be US$500,000. In the event of success, an
additional estimated US$200,000 will be required to complete the
well for production.
-- Pantheon's proposed cost to exercise the proposed option over
the 7,820 acres is estimated to be c.US$1.5m, increasing the
Company's WI to 75% in this area. Importantly, it is proposed that
this option can be exercised after completion of the VOBM#4
sidetrack.
-- Bobby Gray, the principal of Vision, Pantheon's working
interest partner in the leases and operator, Vision Gas Resources
LLC ("Vision"), is also proposing to increase his personal working
interest in VOBM#4 from 16.67% to 25%.
-- Alongside existing cash of c.US$3m, the new funds will
primarily be used to accelerate the Company's exploration,
appraisal and development programme. This is anticipated to
include:
o a second well targeting the Wilcox formation, a well-known and
significant regional producing formation;
o an additional Polk County Eagle Ford sandstone vertical
well;
o a centre basin test well, targeting the Eagle Ford sandstone
in Tyler County that was initially the main target for the VOBM #4
well;
o an exploration well on 'Prospect D', the West West Double A
prospect in Polk County; and
o the installation of a new gas processing facility in Tyler
County to monetise discoveries in the first half of 2018, adding to
production anticipated from the new 15mmcf/d production facility in
Polk County.
The placing is being conducted through an accelerated
bookbuilding process (the "Bookbuild"), which will be launched
immediately following this Announcement and will be made available
to eligible institutional investors. The Bookbuild is expected to
close no later than 8 a.m. on 28 July 2017, but the Sole Bookrunner
and the Company reserve the right to close the Bookbuild earlier or
later, without further notice.
Stifel has been appointed as Sole Bookrunner and Panmure Gordon
has been appointed as Co-Lead Manager in respect of the
Placing.
The Placing Price is equivalent to a discount of 4.4 per cent.
to the closing share price on AIM on the 26 July 2017 (being the
last Business Day prior to this Announcement).
The number of Placing Shares to be issued will be determined
based on the exchange rate between the U.S. dollar and pound
sterling on the date on which the Bookbuild is closed. Any
reference to gross or net proceeds in this Announcement or any
other amount in this Announcement stated in US$ assumes an exchange
rate of 1:0.76, being the exchange rate between the U.S. dollar and
pound sterling on 27 July 2017.
John ("Jay") Bishop Cheatham, CEO and Justin Hondris, Finance
Director have indicated that they intend to participate in the
Placing for an aggregated amount of GBP70,000. The ultimate
allocation to the Directors is at the absolute discretion of the
Sole Bookrunner and the Company.
Jay Cheatham, CEO of Pantheon Resources, said:
"This is an opportunity that rarely comes along in the oil and
gas business; the ability to increase our working interest from 50%
to 75% over 7,820 acres after the unexpected discovery of the
potentially commercial Wilcox zone in VOBM#4 was an easy decision.
Following the excellent logs we retrieved across the Wilcox zone,
we have sought shareholder support to increase our position here
and if the sidetrack is successful it will have significant
implications across this acreage.
"This in no way diminishes the potential of the Eagle Ford
sandstone which remains our primary objective and indeed will be
providing us with our first production and cashflows from our Polk
County acreage. Importantly, the acreage covered by the proposed
option offers potential from all four regionally productive zones:
the Wilcox, Navarro, Austin Chalk and Eagle Ford Sandstone.
"This proposed placing will not only give us the means to
acquire an increased WI in some of our key licence areas, but it
will allow us to accelerate our drilling programme, to continue to
unlock the resource potential in Polk and Tyler Counties. We
continue to have real confidence in the outlook for the business,
our recent drilling campaign, although hit by operational
difficulties has allowed us to learn a lot of valuable lessons
about appropriate drilling and completion techniques, which we will
apply going forward. We have also strengthened our operational
capability with the appointment of Philip Gobe and technical
consultants Sierra Hamilton and our estimated operating costs
remain best in class, estimated to be below $5 per barrel of oil
equivalent."
+44 20 7484
Pantheon Resources plc 5359
Jay Cheatham, CEO
Justin Hondris, Director, Finance
and Corporate Development
+44 20 7710
Stifel Nicolaus Europe Limited 7600
Callum Stewart
Nicholas Rhodes
Ashton Clanfield
+44 20 7886
Panmure Gordon (UK) Limited 2500
Adam James
Atholl Tweedie
Tom Salvesen
+44 20 3727
FTI Consulting 1000
Ed Westropp
James Styles
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public domain. If
you have any queries on this, then please contact Justin Hondris,
Director, Finance and Corporate Development (responsible for
arranging release of this announcement) on +44 20 7484 5359.
Background to and reasons for the Placing
Pantheon has with its lease co-venturer, Vision, been focused on
exploring and developing its acreage and has, since July 2015,
drilled five exploration and development wells, all of which have
discovered hydrocarbons. These discoveries have helped to prove the
Company's study on the Eagle Ford study that it completed in
partnership with Vision and the Bureau of Economic Geology at the
University of Texas, at Austin.
As previously detailed, the Company is currently planning to
start frac operations on the VOBM#2H in early August 2017 and will
commence drilling of the side track and subsequent testing of the
VOBM#4 well at the end of August 2017. The Company is also
continuing to progress to first production with the construction of
the Kinder Morgan gas processing facility in Polk County estimated
to be complete by September 2017.
The Company is keen to progress its exploration and development
activities across its Polk and Tyler county acreage, and intends to
use the proceeds to accelerate its drilling programme across its
acreage.
Proposed Accelerated Drilling Programme
Wilcox#2 Well
With the discovery of the Wilcox formation at the VOBM#4,
Pantheon and the operator Vision have matured additional drilling
targets to further delineate the Wilcox formation across the
acreage position.
VOBM#5 Well
The operator intends to drill a development step out well from
the Company's existing Polk County wells. This well will, if
successful contribute to the Company's planned production Polk
County.
Centre Basin Test Well
With new funding in place, the Company can also move forward to
drill the centre basin test in Tyler County, which would be
designed to appraise the lateral extent of the significant Eagle
Ford sandstone basin.
Prospect D Well
The Company will drill a well on Prospect D in the West West
Double A Prospect in Polk County. This well will target a
significant exploration prospect to the west of the Company's
existing Polk county discoveries.
Tyler County Gas Plant
Following the successful testing of the VOS#1 well and depending
on results of the VOBM#4 well and the subsequent proposed Wilcox#2
well, the Company intends to order and install a gas processing
plant in Tyler County, as already done in Polk County.
Use of Proceeds
The gross proceeds receivable by the Company pursuant to the
Fundraising are expected to be US$12.5m. The Company intends to use
the proceeds together with its existing cash resources, which as at
27 July were c.US$3 million and potential future cash flow from
production to fund its forward capital programme:
Fixed Capex US$m
--------------------------------- --------
Balance of Polk County Gas
Plant 0.6
Completion of VOBM#2H Frac 0.3
Completion of VOBM#4 Sidetrack 0.3
Lease Renewals (1) 1.4
G&A(1) 0.7
Total 3.3
VOBM#4 and Tyler County Acreage US$m
--------------------------------- --------
Exercise VOBM#4 Well Option 0.7
Exercise Tyler County Acreage
Option 1.5
---------------------------------- --------
Total 2.2
Optional Capex US$m
--------------------------------- --------
Wilcox#2 Well (75% WI) 1.9
VOBM#5 Well (58% WI) 2.0
Centre Basin Test Well (50% 3.0 -
- 75% WI) 4.5
Tyler County Gas Plant 1.3
Prospect D Wells 2.5
---------------------------------- --------
Total 10.6
- 12.6
Total 16.1
- 17.6
---------------------------------- --------
In addition to the above funding requirements, the Company will
incur financing costs in relation to the Placing, which will be
funded out of the gross proceeds of the Placing.
Operational Update
Lease Renewals
The Company currently holds interests in several thousand leases
across its Polk and Tyler county acreage. These leases require
periodic renewal, where they are not held by production or
activity. This is in the normal course of business for companies
operating in the US oil and gas industry.
The Company recently renewed a number of leases and is pleased
to report that it has been able to renew on improved lease terms, a
reflection of the declining level of activity in the region and
from the lower oil price environment.
Current Lease Dispute
Pantheon and Vision have a dispute with two third parties
regarding interests in certain acreage in Polk County covering the
VOBM#1 and VOBM#2H well units. Pantheon and Vision believe it
commercially sensible to reach a contractual settlement. Subject to
contract, anticipated settlement terms will result in Pantheons WI
in the units associated with these two wells being reduced from 58%
to 55.1%, after well payout. Should any future well units include
acreage from this dispute, Pantheon's WI in those units will be
reduced by a maximum of 2.9%, subject to the third party paying its
share of costs of that well. The third party will also be obliged
to pay processing and marketing charges related to production.
Gulf South Pipeline Maintenance
The Company has been informed by Gulf South Pipeline Company
that maintenance will be undertaken on the main trunkline, through
which the Company will transport its gas production, during the
period September through mid-November 2017. This will result in
some disruption to production from our Polk County wells during the
period. The likely impact on Pantheon will be a deferral of
production volumes until late November.
Details of the Placing
The Placing will be effected by way of the Bookbuild to be
managed by Stifel and will be conducted in accordance with the
terms and conditions set out in Appendix 1 and subject to the risks
described in Appendix 2. The Bookbuild will commence with immediate
effect and is expected to close no later than 8.00 a.m. on 28 July
2017, but Stifel and the Company reserve the right to close the
Bookbuild earlier or later, without further notice.
The timing of the closing of the Bookbuild and allocations are
at the absolute discretion of Stifel and the Company. The number of
Placing Shares will be agreed by the Company with Stifel at the
close of the Bookbuild. Details of the number of Placing Shares
will be announced as soon as practicable after the close of the
Bookbuild.
The Placing Shares will be allotted and issued free of all
liens, charges and encumbrances and will, when issued and fully
paid, rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive all dividends and other
distributions declared, made or paid after the date of their issue.
Application will be made for the Placing Shares to be admitted to
trading on AIM. It is expected that Admission and dealings in
Placing Shares will commence at 8.00 am on 1 August 2017.
This Announcement should be read in its entirety. In particular,
your attention is drawn to the section of this Announcement headed
"Important Information", to the detailed terms and conditions of
the Placing and further information relating to the Bookbuild
described in Appendix 1 and to Appendix 2 which contains detail of
certain risks relating to the Fundraising. By choosing to
participate in the Placing and by making an oral and legally
binding offer to acquire Placing Shares, investors will be deemed
to have read and understood this Announcement in its entirety
(including the detailed terms and conditions in Appendix 1 and
risks set out in Appendix 2) and to be making such offer on the
terms and subject to the conditions in it, and to be providing the
representations, warranties, acknowledgements and undertakings
contained in Appendix 1.
Definitions and Glossary of Technical Terms
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context requires otherwise:
"Admission" the admission to trading on
AIM of the Placing Shares becoming
effective in accordance with
Rule 6 of the AIM Rules for
Companies, which is expected
to take place on or around
1 August 2017
"AIM" the market of that name operated
by the London Stock Exchange
"Articles" the existing articles of association
of the Company as at the date
of this announcement
"ASIC" the Australian Securities and
Investments Commission
"Board" or "Directors" the directors of the Company from
time to time
"Bookbuild" the bookbuilding process to be
conducted by the Co-Lead Managers
to arrange participation by certain
Placees in the Placing which will
establish the number of Placing
Shares
"Co-Lead Managers" Stifel and Panmure Gordon and
"Co-Lead Manager" or "Relevant
Co-Lead Manager" shall mean any
one of them, as the context requires
"Company" or Pantheon Resources Plc
"Pantheon"
"CREST" the relevant system for the paperless
settlement of trades and the holding
of uncertificated securities operated
by Euroclear UK & Ireland in accordance
with the CREST Regulations
"CREST member" a person who has been admitted
by Euroclear UK & Ireland as
a system-member (as defined
in the CREST Regulations)
"CREST participant" a person who is, in relation
to CREST, a system participant
(as defined in the CREST Regulations)
"CREST Regulations" the Uncertificated Securities
Regulations 2001, as amended
"Euroclear UK Euroclear UK & Ireland Limited,
& Ireland" the operator of CREST
"FCA" the Financial Conduct Authority
of the United Kingdom
"FSMA" the Financial Services and
Markets Act 2000 (as amended)
"Group" the Company, together with
its subsidiary undertakings
"ISIN" International Securities Identification
Number
"London Stock London Stock Exchange plc
Exchange"
"Ordinary Shares" ordinary shares of GBP0.01
or "Shares" each in the capital of the
Company
"Panmure Gordon" Panmure Gordon (UK) Limited
"Placees" the persons by whom or on whose
behalf a commitment to acquire
Placing Shares will be or has
been given
"Placing" the placing of the Placing
Shares at the Placing Price
by the Co-Lead Managers and
the Company on the terms and
subject to the conditions set
out in this Placing Announcement
and the Placing Agreement
"Placing Agreement" the conditional agreement dated
on or around 27 July 2017 between
the Company and the Co-Lead
Managers relating to the Placing
"Placing Price" the price per Ordinary Share
to be agreed between the Co-Lead
Managers and the Company and
to be paid per Placing Share
by Placees
"Placing Shares" the Ordinary Shares placed
with institutional and other
investors by the Co-Lead Managers
and the Company and which are
to be issued by the Company
pursuant to the Placing
"Prospectus Directive 2003/71/EC of the
Directive" European Parliament and of
the Council of 4 November 2003
on the prospectus to be published
when securities are offered
to the public or admitted to
trading and amending Directive
2001/34/EC
"Prospectus the rules made by the FCA under
Rules" Part VI of FSMA in relation
to offers of transferable securities
to the public and admission
of transferable securities
to trading on a regulated market
"Registrars" Computershare Investors Services
plc, The Pavilions, Bridgwater
Road, Bristol BS99 7NH
"Regulatory one of the regulatory information
Information services approved by the London
Service" Stock Exchange for the distribution
to the public of AIM announcements
"sterling", the lawful currency of the
"pounds sterling", United Kingdom
"GBP", "pence"
or "p"
"Stifel" Stifel Nicolaus Europe Limited
"US$" or "US the lawful currency of the
dollar" United States of America
"US Person" has the meaning given in Regulation
S under the US Securities Act
"US Securities the United States Securities
Act" Act of 1933 (as amended)
GLOSSARY
The following glossary of terms applies throughout this
document, unless the context otherwise requires:
"EHS" Environment, Health and Safety
"FSMA" the Financial Services and
Markets Act 2000, as amended
"Prospective Resources" those quantities of petroleum
estimated, as of a given date,
to be potentially recoverable
from undiscovered accumulations
by application of future development
projects. Prospective Resources
have both an associated chance
of discovery and a chance
of development.
"Reserves" reserves are those quantities
of petroleum anticipated to
be commercially recoverable
by application of development
projects to known accumulations
from a given date forward
under defined conditions.
Reserves must further satisfy
four criteria: they must be
discovered, recoverable, commercial,
and remaining (as of the evaluation
date) based on the development
project(s) applied. Reserves
are further categorized in
accordance with the level
of certainty associated with
the estimates and may be sub-classified
based on project maturity
and/or characterized by development
and production status
"Resources" those quantities of petroleum
estimated, as of a given date,
to be potentially recoverable
from known accumulations by
application of development
projects but which are not
currently considered to be
commercially recoverable due
to one or more contingencies.
Appendix 1 - Terms and Conditions of the Placing
IMPORTANT INFORMATION REGARDING THE PLACING
FOR INVITED PLACEES ONLY, CAPITALISED TERMS USED IN THIS APPIX
ARE DEFINED IN THIS ANNOUNCEMENT
THIS ANNOUNCEMENT, INCLUDING THIS APPIX AND THE INFORMATION IN
IT, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR
INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF
SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR
DISTRIBUTION WOULD BE UNLAWFUL.
EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL,
TAX, BUSINESS AND RELATED ASPECTS OF AN INVESTMENT IN SHARES IN THE
COMPANY.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE
PLACING. THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE
FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT PERSONS
SELECTED BY THE CO-LEAD MANAGERS WHO ARE: (A) PERSONS IN MEMBER
STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS
WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE
("QUALIFIED INVESTORS"); (B) IN THE UNITED KINGDOM, PERSONS WHO:
(I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS
AND ARE "INVESTMENT PROFESSIONALS" FALLING WITHIN ARTICLE 19(5) OF
THE UNITED KINGDOM FINANCIAL SERVICES AND MARKETS ACT 2000
(FINANCIAL PROMOTION) ORDER 2005 (AS AMED) (THE "ORDER"); OR (II)
ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH
COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; (C)
PERSONS SUBJECT TO THE LAWS OF A MEMBER STATE OF THE EUROPEAN
ECONOMIC AREA (OTHER THAN, FOR THE AVOIDANCE OF DOUBT, THE UK), WHO
ARE (I) "QUALIFIED INVESTORS" (AS DEFINED IN ARTICLE 2(1)(E) OF THE
PROSPECTUS DIRECTIVE) ACTING AS A PRINCIPAL FOR THEIR OWN ACCOUNT
TO WHOM THE PLACING OR AN INVITATION TO SUBSCRIBE FOR PLACING
SHARES IN THE MANNER CONTEMPLATED BY THIS ANNOUNCEMENT AND ANY
COMMUNICATION OR CORRESPONDENCE IN CONNECTION THEREWITH IS
PERMITTED BY THE LAWS OF THAT MEMBER STATE OR (II) IF THEY ARE NOT
IN ANY SUCH MEMBER STATE BUT ARE ACTING FOR THE ACCOUNT OF SUCH
PERSON THEN (I) APPLIES IN RESPECT OF EACH SUCH PURCHASER; (D)
PERSONS IN OR OTHERWISE SUBJECT TO THE LAWS OF SWITZERLAND TO WHOM
THE PLACING OR AN INVITATION TO SUBSCRIBE FOR PLACING SHARES IN THE
MANNER CONTEMPLATED BY THIS ANNOUNCEMENT AND ANY COMMUNICATION OR
CORRESPONDENCE THEREWITH IS PERMITTED BY THE LAWS OF SWITZERLAND
AND WILL NOT RESULT IN A 'PUBLIC OFFER' UNDER SWISS LAW; (E)
PERSONS IN AUSTRALIA WHO ARE ABLE TO RECEIVE AN OFFER FOR
SECURITIES WITHOUT DISCLOSURE UNDER PART 6D.2 OF THE AUSTRALIAN
CORPORATIONS ACT 2011 (CTH) ("CORPORATIONS ACT") INCLUDING, WITHOUT
LIMITATION, AS A "SOPHISTICATED INVESTOR" AS DEFINED IN SECTION
708(8) OF THE CORPORATIONS ACT OR A "PROFESSIONAL INVESTOR" AS
DEFINED IN SECTION 708(11) OF THE CORPORATIONS ACT AND ARE NOT
ACQUIRING PLACING SHARES WITH THE PURPOSE OF SELLING OR
TRANSFERRING THEM OR GRANTING, ISSUING, OR TRANSFERRING INTERESTS
IN, OR OPTIONS OVER, PLACING SHARES; (F) PERSONS WHO, IF IN THE
UNITED STATES, ARE "QUALIFIED INVESTORS" AS DEFINED IN RULE 144A
UNDER THE US SECURITIES ACT; OR (G) PERSONS OUTSIDE THE UNITED
STATES, THE UNITED KINGDOM, SWITZERLAND OR OTHER MEMBER STATES OF
THE EUROPEAN ECONOMIC AREA TO WHOM THE PLACING OR AN INVITATION TO
SUBSCRIBE FOR THE PLACING SHARES IN THE MANNER CONTEMPLATED BY THIS
ANNOUNCEMENT AND ANY COMMUNICATION OR CORRESPONDENCE THEREWITH IS
PERMITTED BY THE LAWS OF THE JURISDICTION IN WHICH IT IS SITUATED
OR FROM WHERE THE PLACEE SUBMITTED ITS BID TO SUBSCRIBE FOR PLACING
SHARES AND IT IS A PERSON TO WHOM THE PLACING SHARES CAN LAWFULLY
BE OFFERED AND ISSUED UNDER ALL APPLICABLE LAWS, WITHOUT THE NEED
FOR ANY APPROVAL, REGISTRATION, FILING OR LODGEMENT OF ANY KIND,
INCLUDING A PROSPECTUS OR OTHER DISCLOSURE DOCUMENT; (ALL SUCH
PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS".)
THIS APPIX AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT
BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS.
ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPIX AND THE
TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO
RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
NEITHER THIS ANNOUNCEMENT NOR THE TERMS AND CONDITIONS SET OUT IN
THIS APPIX CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY.
Persons who are invited to and who choose to participate in the
Placing, by making an oral or written offer to subscribe for
Placing Shares (the "Placees"), will be deemed to have read and
understood this Announcement, including this Appendix, in its
entirety and to be making such offer on the terms and conditions,
and to be providing the representations, warranties,
acknowledgements, undertakings and agreements contained in this
Appendix. In particular, each such Placee represents, warrants and
acknowledges to the Co-Lead Managers and the Company that it is a
Relevant Person (as defined above) and undertakes that it will
acquire, hold, manage or dispose of any Placing Shares that are
allocated to it for the purposes of its business.
This Announcement does not constitute an offer, and may not be
used in connection with an offer to sell or issue or the
solicitation of an offer to buy or subscribe for Placing Shares in
any jurisdiction in which such offer or solicitation is or may be
unauthorised or unlawful and any failure to comply with these
restrictions may constitute a violation of applicable securities
laws in such jurisdictions. This Announcement and the information
contained herein is not for release, publication or distribution,
directly or indirectly, to persons in the United States, Canada,
Japan, the Republic of South Africa or in any other jurisdiction in
which such release, publication or distribution is unauthorised or
unlawful. Persons into whose possession this Announcement may come
are required by the Company to inform themselves about and to
observe any restrictions on transfer of this Announcement. No
public offer of securities of the Company is being made in any
jurisdiction.
In particular, the Placing Shares referred to in this
Announcement have not been and will not be registered under the
Securities Act or the laws of any state or other jurisdiction in
the United States. Furthermore the Placing Shares have not been
recommended by any United States federal or state securities
commission or regulatory authority, nor have any of the foregoing
authorities passed upon or endorsed the merits of the Placing or
confirmed the accuracy or determined the adequacy of this
Announcement. Any representation to the contrary is a criminal
offence in the United States. The Placing Shares may not be,
directly or indirectly, offered, sold, pledged, resold, taken up,
delivered or otherwise transferred in or into the United States
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and
applicable state securities laws.
The relevant clearances have not been, and nor will they be,
obtained from the securities commission of any province or
territory of Canada; no prospectus has been lodged and/or
registered with the ASIC or the Japanese Ministry of Finance; the
approval of the South African Exchange Control Authorities has not
been, and will not be, obtained in relation to the Placing Shares;
and the Placing Shares have not been, and nor will they be,
registered under or offered in compliance with the securities laws
of any state, province or territory of Australia, Canada, Japan or
the Republic of South Africa. Accordingly, the Placing Shares may
not (unless an exemption under the relevant securities laws is
applicable) be offered, sold, resold, pledged, taken up, delivered
or otherwise transferred directly or indirectly, in or into
Australia, Canada, Japan or the Republic of South Africa or any
other jurisdiction where to do so would be unauthorised or
unlawful.
The distribution of this Announcement and the Placing and issue
of the Placing Shares in certain jurisdictions may be restricted by
law. No action has been taken by the Company or the Co-Lead
Managers that would permit an offering of such securities or
possession or distribution of this Announcement or any other
offering or publicity material relating to such securities in any
jurisdiction where action for that purpose is required.
The price of securities and the income from them may go down as
well as up and investors may not get back the full amount on
disposal of the securities. Any indication in this Announcement of
the price at which Ordinary Shares have been bought or sold in the
past cannot be relied upon as a guide to future performance.
Persons (including, without limitation, nominees and trustees)
who have a contractual or other legal obligation to forward a copy
of this Appendix or the Announcement of which it forms part should
seek appropriate advice before taking any action.
1. Placing
1.1 Pantheon Resources Plc (company number: 05385506) (the
"Company"), intends to raise approximately US$12.5 million through
the issue of new Ordinary Shares.
1.2 The Company has appointed Stifel Nicolaus Europe Limited
("Stifel") as bookrunner and co-lead manager in respect of the
Placing, and has appointed Panmure Gordon (UK) Limited ("Panmure
Gordon") as co-lead manager in respect of the Placing.
1.3 The Co-Lead Managers will today commence an accelerated
bookbuilding process in respect of the Placing (the "Bookbuild") to
determine demand for participation in the Placing by Placees. This
Appendix gives details of the terms and conditions of, and the
mechanics of participation in, the Placing. No commissions will be
paid to Placees or by Placees in respect of any Placing Shares.
1.4 The price payable per Placing Share shall be the Placing Price.
1.5 The Co-Lead Managers and the Company shall be entitled to
effect the Placing by such alternative method to the Bookbuild as
they may, in their sole discretion, determine.
2. Bookbuild
Participation in, and principal terms of, the Placing:
2.1 The Co-Lead Managers are acting as bookbuilders and as agents of the Company.
2.2 By participating in the Bookbuild and Placing, the Placee
(and any person acting on its behalf including, for the avoidance
of doubt, any nominee) acknowledges that neither Co-Lead Manager is
making any recommendation to it nor advising it, nor is the Placee
relying on either Co-Lead Manager to advise, regarding the
suitability or merits of acquiring any Placing Shares or entering
into any transaction connected with them. The Placee acknowledges
and agrees that Stifel is acting as the bookrunner in respect of
the Placing, and is assisting the Company in identifying
prospective purchasers for the Placing Shares and providing other
assistance to the Company in respect of the Placing. The Placee
acknowledges and agrees that neither Co-Lead Manager is acting for,
and that the Placee does not expect either to have, and
acknowledges and agrees that each Co-Lead Manager does not have,
any duties or responsibilities towards the Placee for providing
protections afforded to its customers or clients or advising it
with regard to its participation in the Placing and that the Placee
is not, and will not be, a customer or client of either Co-Lead
Manager in relation to its participation in the Placing. Therefore
neither Co-Lead Manager will be responsible to the Placee or to any
other person for providing the protections afforded to its
respective clients or for providing advice in relation to the
transactions and arrangements described in this Announcement, nor
do the contents or receipt of this Announcement constitute the
provision of investment advice by either Co-Lead Manager.
2.3 Participation in the Placing will only be available to
persons who may lawfully be and are invited to participate by
either Co-Lead Manager or the Company. Each Co-Lead Manager and its
affiliates or its agents are entitled to enter bids as principal in
the Bookbuild.
2.4 The Placing Price will be the price per Placing Share agreed
between the Co-Lead Managers and the Company and subsequently
notified to Placees and announced in the Placing Results
Announcement (as defined below). The number of Placing Shares to be
issued, the Placing Price and the aggregate proceeds to be raised
through the Placing will be determined by the Co-Lead Managers in
consultation with the Company following completion of the
Bookbuild. The result of the Bookbuild will be announced on a
Regulatory Information Service following the completion of the
Bookbuild (the "Placing Results Announcement").
2.5 To participate in the Bookbuild, Placees should communicate
their bid by telephone to their usual sales contact at the Relevant
Co-Lead Manager. Each bid should state the number of Placing Shares
for which the prospective Placee wishes to subscribe at the Placing
Price. Bids may be scaled down by Stifel on the basis referred to
in paragraph 2.10 below.
2.6 The timing of the close of the Bookbuild process will be at
the discretion of Stifel. The Company reserves the right (with the
agreement of Stifel) to reduce or seek to increase the amount to be
raised pursuant to the Placing, in its absolute discretion.
2.7 Each prospective Placee's allocation will be confirmed to
the Placee orally by the Relevant Co-Lead Manager following the
close of the Placing, and (a) conditional trade confirmation(s)
will be despatched as soon as possible thereafter. The Relevant
Co-Lead Manager's oral confirmation to such Placee will constitute
an irrevocable legally binding commitment upon such person (who
will at that point become a Placee) in favour of the Relevant
Co-Lead Manager and the Company, under which the Placee agrees to
acquire the number of Placing Shares allocated to it at the Placing
Price on the terms and conditions set out in this Appendix and in
accordance with the Company's articles of association.
2.8 Each prospective Placee's allocation and commitment will be
evidenced by (a) conditional trade confirmation(s) issued to such
Placee by the Relevant Co-Lead Manager. The terms of this Appendix
will be deemed to be incorporated in the trade confirmation(s).
2.9 The Placing Results Announcement shall detail the number of Placing Shares to be issued.
2.10 Subject to paragraphs 2.5 and 2.6 above, Stifel (in
consultation with Panmure Gordon and the Company) may choose to
accept bids, either in whole or in part, on the basis of
allocations determined by the Relevant Co-Lead Manager and the
Company acting together and Stifel may scale down any bids for this
purpose on such basis as the Stifel (in consultation with Panmure
Gordon and the Company) may determine. The acceptance of bids shall
be at the Relevant Co-Lead Manager's absolute discretion. Stifel
may also, notwithstanding paragraphs 2.5 and 2.6 above, subject to
the prior consent of the Company and in consultation with Panmure
Gordon: (i) allocate Placing Shares after the time of any initial
allocation to any person submitting a bid after that time; and (ii)
allocate Placing Shares after the Bookbuild has closed to any
person submitting a bid after that time. The Company and the
Co-Lead Managers acting together reserve the right not to accept
bids or to accept bids in part rather than in whole.
2.11 A bid in the Bookbuild will be made on the terms and
subject to the conditions in this Announcement (including the
Appendix) and will be legally binding on the Placee on behalf of
which it is made and, except with the Relevant Co-Lead Manager's
consent, will not be capable of variation or revocation after the
time at which it is submitted. Each Placee will also have an
immediate, separate, irrevocable and binding obligation, owed to
the Relevant Co-Lead Manager, to pay it (or as it may direct) in
cleared funds an amount equal to the product of the Placing Price
and the number of Placing Shares such Placee has agreed to acquire.
Each Placee's obligations under this paragraph will be owed to the
Relevant Co-Lead Manager.
2.12 Except as required by law or regulation, no press release
or other announcement will be made by either Co-Lead Manager or the
Company using the name of any Placee (or its agent), in its
capacity as Placee (or agent), other than with such Placee's prior
written consent.
2.13 Irrespective of the time at which a Placee's allocation
pursuant to the Placing is confirmed, settlement for all Placing
Shares to be acquired pursuant to the Placing will be required to
be made at the relevant time, on the basis explained below under
"Registration and Settlement".
2.14 All obligations under the Bookbuild and Placing will be
subject to fulfilment of the conditions referred to below under
"Placing Agreement" and to the Placing not being terminated on the
basis referred to below under "Placing Agreement".
2.15 By participating in the Bookbuild and the Placing, each
Placee will agree that its rights and obligations in respect of the
Placing will terminate only in the circumstances described below
and will not be capable of rescission or termination by the
Placee.
2.16 To the fullest extent permissible by law and applicable
rules of the FCA, neither Co-Lead Manager nor any of their
respective affiliates or agents shall have any responsibility or
liability to Placees (or to any other person whether acting on
behalf of a Placee or otherwise whether or not a recipient of these
terms and conditions) in respect of the Placing. Each Placee
acknowledges and agrees that the Company is responsible for the
allotment of the Placing Shares to the Placees and the Co-Lead
Managers shall have no liability to the Placees for the failure of
the Company to fulfil those obligations. In particular, neither
Co-Lead Manager nor any of their respective affiliates or agents
shall have any liability (including to the extent permissible by
law, any fiduciary duties) in respect of the conduct of the
Bookbuild process or of any alternative method of effecting the
Placing as the Co-Lead Managers and the Company may agree.
2.17 In making an investment decision, Placees must rely on
their own examination of the Company and its prospects and the
terms of the Placing, including the merits and risks involved in
investing in the Placing Shares.
2.18 Settlement will occur on a date to be advised but expected
to be on or around 1 August 2017 ("Closing Date").
3. Placing Shares and Quotation
3.1 The Placing Shares will be issued fully paid and will rank
equally, from the date of issue, in all respects with the Company's
existing issued Ordinary Shares, including the right to receive all
dividends and other distributions declared, made or paid in respect
of such Ordinary Shares after the date of issue of the Placing
Shares.
3.2 Application will be made to the London Stock Exchange for
admission to trading of the Placing Shares on AIM ("Admission"). It
is anticipated that Admission will become effective on or around 1
August 2017 and that dealings in the Placing Shares will commence
at that time.
4. Placing Agreement
4.1 On 27 July 2017, the Company and the Co-Lead Managers
entered into a placing agreement in connection with the Placing
(the "Placing Agreement"). Pursuant to the Placing Agreement, the
Co-Lead Managers have agreed to use their reasonable endeavours to
place the Placing Shares with prospective purchasers.
4.2 The Co-Lead Managers' obligations under the Placing
Agreement in respect of the Placing Shares are conditional, inter
alia, on:
(a) the agreement between the Co-Lead Managers and the Company
of the number of Placing Shares to be issued as established in the
Bookbuild process;
(b) none of the warranties contained in the Placing Agreement
being untrue, inaccurate or misleading as at the date of the
Placing Agreement and at all times during the period up to and
including the date of Admission as though they had been given and
made on such dates (by reference to the facts and circumstances
existing at such dates); and
(c) Admission taking place not later than 8.00 a.m. on 1 August
2017 or such later date as the Company and Stifel may otherwise
agree but not being later than 8.00 a.m. on 15 August 2017.
4.3 If: (i) any of the conditions contained in the Placing
Agreement in relation to the Placing Shares are not fulfilled or
waived by Stifel by the time or date where specified (or such later
time or date as the Company and Stifel may agree); (ii) any of such
conditions becomes incapable of being fulfilled; or (iii) the
Placing Agreement is terminated in the circumstances specified
below, the Placing in relation to the Placing Shares will lapse and
the Placee's rights and obligations hereunder in relation to the
Placing Shares shall cease and terminate at such time and each
Placee agrees that no claim can be made by the Placee in respect
thereof.
4.4 Stifel may, at its absolute discretion and upon such terms
as it thinks fit, waive, or extend the period for, compliance by
the Company with the whole or any part of any of the Company's
obligations in relation to the conditions in the Placing Agreement
save that the conditions relating to the allotment and issue of the
Placing Shares (subject only to Admission) may not be waived. Any
such extension or waiver will not affect Placees' rights and
obligations under the terms and conditions set out in this
Appendix.
4.5 Neither of the Co-Lead Managers nor the Company shall have
any liability to any Placee (or to any other person whether acting
on behalf of a Placee or otherwise) in respect of any decision they
may make as to whether or not to waive or to extend the time and/or
date for the satisfaction of any condition to the Placing nor for
any decision they may make as to the satisfaction of any condition
or in respect of the Placing generally and by participating in the
Placing each Placee agrees that any such decision is within the
absolute discretion of Stifel.
4.6 Stifel is entitled, at any time before Admission, to
terminate the Placing Agreement by giving notice to the Company in
certain circumstances, including, inter alia, a breach of the
warranties given to the Co-Lead Managers in the Placing Agreement,
the failure of the Company to comply with obligations under the
Placing Agreement or the occurrence of a material adverse change in
the financial condition, or the earnings or the business affairs or
business prospects of the Company. Following Admission, the Placing
Agreement is not capable of rescission or termination.
4.7 If any of the obligations of the Co-Lead Managers with
respect to the Placing are terminated in the manner contemplated
above, the rights and obligations of each Placee shall cease and
terminate at such time and no claim can be made by any Placee in
respect thereof. The rights and obligations of the Placees shall
terminate only in the circumstances described in these terms and
conditions and will not be subject to termination by the Placee or
any prospective Placee at any time or in any circumstances. By
participating in the Placing, Placees agree that the exercise by
the Relevant Co-Lead Manager of any right of termination or other
discretion under the Placing Agreement shall be within the absolute
discretion of the Relevant Co-Lead Manager, and that it need not
make any reference to Placees and that it shall have no liability
to Placees whatsoever in connection with any such exercise.
5. Offer personal
The offering of Placing Shares and the agreement arising from
acceptance of the Placing is personal to each Placee and does not
constitute an offering to any other person or to the public. A
Placee may not assign, transfer, or in any other manner, deal with
its rights or obligations under the agreement arising from the
acceptance of the Placing, without the prior written agreement of
the Relevant Co-Lead Manager in accordance with all relevant legal
requirements.
6. No Prospectus
6.1 The Placing Shares are being offered to a limited number of
specifically invited persons only and will not be offered in such a
way as to require a prospectus in the United Kingdom or in any
other jurisdiction. No offering or admission document or prospectus
has been or will be submitted to be approved by the FCA, the London
Stock Exchange or any other regulatory body in relation to the
Placing and Placees' commitments will be made solely on the basis
of the information contained in this Announcement (including this
Appendix).
6.3 Each Placee, by making an offer to subscribe for Placing
Shares, agrees that the content of this Announcement (including
this Appendix) is exclusively the responsibility of the Company and
confirms that it has neither received nor relied on any other
information, representation, warranty, or statement made by or on
behalf of the Company or the Co-Lead Managers or any other person
and none of the Company or the Co-Lead Managers nor any other
person will be liable for any Placee's decision to participate in
the Placing based on any other information, representation,
warranty or statement which Placees may have obtained or received.
Each Placee acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the
Company in accepting a participation in the Placing. Nothing in
this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
7. Registration and Settlement
7.1 Settlement of transactions in the Placing Shares will,
unless otherwise agreed, take place on a delivery versus payment
basis within CREST.
7.2 The Company will procure the delivery of the Placing Shares
to CREST accounts operated by the Relevant Co-Lead Manager for the
Company and the Relevant Co-Lead Manager will enter its delivery
(DEL) instructions into the CREST system. The input to CREST by
each Placee of a matching or acceptance instruction will then allow
delivery of the relevant Placing Shares to that Placee against
payment.
7.3 The Company reserves the right to require settlement for and
delivery of the Placing Shares (or a portion thereof) to any Placee
in any form it requires if, in the Relevant Co-Lead Manager's
opinion, delivery or settlement is not possible or practicable
within CREST or would not be consistent with the regulatory
requirements in the Placee's jurisdiction.
7.4 Following the close of the Bookbuild for the Placing, each
Placee allocated Placing Shares in the Placing may be sent a
conditional trade confirmation stating the number of Placing
Shares, the Placing Price and the subscription amount payable to be
allocated to it and will be required to provide the Relevant
Co-Lead Manager with funds sufficient to purchase such securities
prior to the Closing Date.
7.5 Each Placee is deemed to agree that, if it does not comply
with these obligations, the Company may sell any or all of the
Placing Shares allocated to that Placee on such Placee's behalf and
retain from the proceeds, for the Company's account and benefit, an
amount equal to the aggregate amount owed by the Placee plus any
interest due. The relevant Placee will, however, remain liable for
any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax (together
with any interest or penalties) which may arise upon the sale of
such Placing Shares on such Placee's behalf.
7.6 It is expected that settlement will take place on or about 1
August 2017 in CREST on a T+2 basis in accordance with the
instructions set out in the conditional trade confirmation.
Settlement will be through Stifel against CREST ID: BAQAQ or
through Panmure Gordon against CREST ID: 83801.
7.8 Following the close of the Bookbuild for the Placing, each
Placee allocated Placing Shares in the Placing will be sent a
conditional trade confirmation(s) stating the number of Placing
Shares to be allocated to it at the Placing Price and settlement
instructions.
7.9 Each Placee agrees that it will do all things necessary to
ensure that delivery and payment is completed in accordance with
the applicable registration and settlement procedures, including if
applicable, CREST rules and regulations and settlement instructions
that it has in place with the Relevant Co-Lead Manager.
7.10 If the Placing Shares are to be delivered to a custodian or
settlement agent, Placees should ensure that the conditional trade
confirmation is copied and delivered immediately to the relevant
person within that organisation. Each Placee shall ensure that,
insofar as Placing Shares are registered in a Placee's name or that
of its nominee or in the name of any person for whom a Placee is
contracting as agent or nominee, such person shall not be a person
who is or may be liable to any UK stamp duty or stamp duty reserve
tax or securities transfer tax.
7.11 Interest is chargeable daily on payments to the extent that
value is received after the due date at the rate per annum of 4
percentage points above the Barclays Bank plc base rate.
Trade date: 28 July 2017
Settlement date: 1 August 2017 (Electronic)
ISIN code for the GB00B125SX82
Placing Shares:
8. Representations and Warranties
By participating in the Bookbuild and Placing each Placee (and
each person acting on its behalf) represents, warrants,
acknowledges and undertakes for the benefit of the Company, the
Co-Lead Managers and their respective officers, employees and
advisers and any person acting on their behalf (together the
"Beneficiaries") as follows:
a) the Placee has read and understood this Announcement
(including the Appendix) in its entirety and that its acquisition
of Placing Shares is subject to and based upon all the terms,
conditions, representations, warranties, acknowledgments,
agreements and undertakings and other information contained
therein;
b) the Placee acknowledges that no offering or admission
document or prospectus has been prepared in connection with the
Placing and represents and warrants that it has not received a
prospectus or other offering or admission document in connection
therewith;
c) the Placee does not expect either Co-Lead Manager to have any
duties or responsibilities to it or any other person for providing
any advice in relation to the transactions and arrangements
described in this Announcement (including the Appendix), nor do the
contents or receipt of this Announcement (including the Appendix)
constitute the giving of investment advice by the Company to the
Placee;
d) the Placee does not expect the Company to have any duty to it
similar or comparable to the "best execution", "suitability" and
"risk warnings" rules of the FCA and the Placee is not relying on
either Co-Lead Manager to advise whether or not the Placing Shares
are in any way a suitable investment for the Placee;
e) the Placee is not relying on any information or
representation or warranty in relation to the Company or the
Placing Shares and it is not relying on any representation or
warranties or agreements given by the Company, the Directors,
employees, officers or agents or the Co-Lead Managers or any other
person except as referred to in the express terms of this
Announcement (including the Appendix) and the Placee agrees that
its subscription for those of the Placing Shares for which it is
committed to subscribe in the Placing will be made solely on this
basis and not otherwise;
f) the Placee has such knowledge and experience in financial,
business and tax matters as to be capable of evaluating the merits
and risks of its investment in the Placing Shares and it is able to
bear the economic risks and complete loss of such investment in the
Placing Shares;
g) the Placee has such knowledge and experience in financial
business matters and expertise in assessing credit and all other
relevant risks that it is capable of evaluating independently, and
has evaluated independently and conducted an in-depth detailed
analysis on, the merits and risks of a purchase of the Placing
Shares for itself and each other person, if any, for whose account
it is acquiring any Placing Shares, and it has determined that the
Placing Shares are a suitable investment for itself and each other
person, if any, for whose account it is acquiring any Placing
Shares, both in the nature and the number of the Placing Shares
being acquired;
h) the Placee has been independently advised as to any resale
restrictions under applicable securities laws in its own
jurisdiction;
i) the Placee understands that the Placing and sale to it of the
Placing Shares has not been and will not be registered under the US
Securities Act or the laws of any state of the United States;
therefore, it agrees that it will not offer, sell or pledge any
Placing Shares in the United States unless and until the Placing
Shares are registered under the US Securities Act (which it
acknowledges the Company has no obligation to do) or unless the
Placing Shares are offered, sold or pledged in a transaction exempt
from, or not subject to, the registration requirements of the US
Securities Act and the laws of any state of the United States;
j) it and each account that it represents is (1)(a) outside the
United States and will be outside the United States at the time
that any buy order for Placing Shares is originated by it, (b)
acquiring the Placing Shares in an "offshore transaction" within
the meaning of Regulation S under the US Securities Act
("Regulation S") and (c) not acquiring any of the Placing Shares as
a result of any form of "directed selling efforts" within the
meaning of Regulation S; or (2)(a) a "qualified institutional
buyer" (as such term is defined in Rule 144A under the US
Securities Act) who has executed and delivered to the Company and
the Co-Lead Managers a US investor letter substantially in the form
provided to it; and (b) not acquiring any of the Placing Shares as
a result of any form of "general solicitation" or "general
advertising" within the meaning of Rule 502(c) under the US
Securities Act;
k) the Placee is not a national or resident of Canada, the
Republic of South Africa or Japan or a corporation, partnership or
other entity organised under the laws of Canada (or any political
sub-division of it), the Republic of South Africa or Japan and the
Placee will not offer, sell or deliver, directly or indirectly, any
of the Placing Shares in Canada, the Republic of South Africa or
Japan or to or for the benefit of any person resident in Canada,
the Republic of South Africa or Japan;
l) if it is a Placee in or otherwise subject to the laws of
Switzerland it is a person to whom the Placing or an invitation to
subscribe for the Placing Shares in the manner contemplated by this
Announcement (including the Appendix) and any communication or
correspondence therewith is permitted by the laws of Switzerland
and will not result in an 'public offer' under Swiss law;
m) if a Placee is an investor located in Australia, the Placing
is conditional upon and is made on the understanding that a
Disclosure Document (as that term is defined in the Corporations
Act 2001 (Cth) ("Australian Corporations Act")), is not required to
be given to the Placee in relation to the Placing because the
Placee is a Professional Investor (as defined in section 708(11) of
the Australian Corporations Act) or a Sophisticated Investor (as
defined in section 708(8) of the Australian Corporations Act) or
otherwise is a person to whom securities can be issued without a
Disclosure Document pursuant to section 708 of the Australian
Corporations Act. The Placee further acknowledges that no
Disclosure Document will be prepared or issued for the purposes of
the Placing and that any shares issued to the Placee will be issued
in compliance with Section 708A of the Australian Corporations Act
and that the Company is not issuing the Placing Shares pursuant to
the Placing for the purpose of the Placee selling or transferring
them, or granting, issuing or transferring interests in, or
warrants over, them.
n) If the Placee is an investor based in Australia, it represents and warrants that:
i) it is either a "sophisticated investor" or "professional
investor" within the meaning of section 708(8) or section 708(11)
of the Australian Corporations Act;
ii) its present intention is to be an investor in the Placing
Shares and to remain an investor at least in the medium term (i.e.
longer than 12 months);
iii) if it is acquiring any Placing Shares on account of one or
more persons, it has full power to make the foregoing
acknowledgments, representations, warranties and agreements on
behalf of each such person; and
iv) it is fully aware that acceptance of the Placing involves a
degree of risk and that this Announcement does not constitute a
securities recommendation or other form of financial product advice
by the Company and that the Company has made the following
statement:
"No financial product advice is provided in the documentation
related to this Placing and nothing in the documentation should be
taken to constitute a recommendation or statement of opinion that
is intended to influence the Placee in making a decision to
participate in the Placing. Any advice contained in the
documentation should be seen as general advice only and does not
take into account the objectives, financial situation or needs of
any particular person. Neither the Company nor any of its related
bodies corporate is licensed to provide financial product advice
and before acting on the information contained in the
documentation, or making a decision to participate in the offer,
the Placee should consider seeking professional financial product
advice from an independent person licensed by the Australian
Securities and Investments Commission to give such advice. Neither
a prospectus nor a Product Disclosure Statement has been or will be
issued in relation to this Placing. No cooling-off regime applies
to the financial products offered to the Placee pursuant to this
Announcement (including the Appendix) or any accompanying
documentation";
o) if a Placee is an investor located within a member state of
the European Economic Area, it is: (i) a "qualified investor"
within the meaning of Article 2(1)(e) of the Prospectus Directive;
and (ii) a "professional client" or an "eligible counterparty"
within the meaning of Article 4(1)(11) and Article 24(2), (3) and
(4), respectively, of Directive 2004/39/EC as implemented into
national law of the relevant EEA state;
p) the Placee is entitled to subscribe for the Placing Shares under the laws of all relevant jurisdictions which apply to it and it has fully observed such laws (including any relevant foreign exchange regulations and/or overseas investment regulations) and obtained all governmental and other consents which may be required thereunder and complied with all necessary formalities and it has not taken any action which will or may result in the Company, the Directors, officers, employees, agents or either Co-Lead Manager acting in breach of any regulatory or legal requirements of any territory in connection with the Placing or its decision to purchase the Placing Shares;
q) if a Placee is a resident in the UK:
i) it is a person of a kind described in Article 19 and/or
Article 49 and/or 43(2) of the Order and it understands that the
information contained in this Appendix is only directed at any of
the following: (A) persons falling within Article 19(5) of the
Order having professional experience in matters relating to
investments; (B) persons falling within Article 49(2)(a) to (d) of
the Order (including companies and unincorporated associations of
high net worth and trusts of high value); (C) persons falling
within Article 43(2) of the Order (members or creditors of certain
bodies corporate); or (D) persons to whom it would otherwise be
lawful to distribute it; and that, accordingly, any investment or
investment activity to which this Appendix relates is available to
it as such a person or will be engaged in only with it as such a
person;
ii) it has complied with its obligations in connection with the
Criminal Justice Act 1993, money laundering and terrorist financing
under the Anti-Terrorism Crime and Security Act 2001, the Proceeds
of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2003,
the Terrorism Act 2006, the Money Laundering Regulations 2007 and
Part VIII of FSMA (the "Regulations") and, if making payment on
behalf of a third party, that satisfactory evidence has been
obtained and recorded by it to verify the identity of the third
party as required by the Regulations and has obtained all
governmental and other consents (if any) which may be required for
the purpose of, or as a consequence of, such purchase, and it will
provide promptly to the Relevant Co-Lead Manager such evidence, if
any, as to the identity or location or legal status of any person
which the Relevant Co-Lead Manager may request from it in
connection with the Placing (for the purpose of complying with such
regulations or ascertaining the nationality of any person or the
jurisdiction(s) to which any person is subject or otherwise) in the
form and manner requested by the Relevant Co-Lead Manager on the
basis that any failure by it to do so may result in the number of
Placing Shares that are to be purchased by it or at its direction
pursuant to the Placing being reduced to such number, or to nil, as
the Relevant Co-Lead Manager may decide at its sole discretion;
r) if a Placee is a financial intermediary, as that term is used
in Article 3(2) of the Prospectus Directive, it represents and
warrants that the Placing Shares purchased by it in the Placing
will not be acquired on a non-discretionary basis on behalf of, nor
will be acquired with a view to their offer or resale to, persons
in a member state of the European Economic Area which has
implemented the Prospectus Directive other than "qualified
investors", or in circumstances in which the prior consent of the
Co-Lead Managers has been given to the offer or resale;
s) if within a reasonable time after a request for verification
of identity the Relevant Co-Lead Manager has not received such
satisfactory evidence, the Relevant Co-Lead Manager may, in its
absolute discretion, reject an application for Placing Shares in
which event all funds delivered by such Placee to the Relevant
Co-Lead Manager (if any) will be returned without interest to the
account of the drawee bank from which they were originally
debited;
t) the Placee has consented to receive information in respect of
securities of the Company and other price-affected securities (as
defined in FSMA) which makes it an "insider" for the purposes of
Part V of FSMA, and it agrees not to deal in any securities of the
Company until such time as the inside information (as defined in
FSMA) of which it has been made aware has been made public for
purposes of FSMA or it has been notified by the Relevant Co-Lead
Manager or the Company that the proposed Placing will not proceed
and any unpublished price sensitive information of which the Placee
is aware has been publicly announced, and, other than in respect of
its knowledge of the proposed Placing and the draft Announcement,
it has neither received nor relied on any confidential price
sensitive information concerning the Company or the Placing
Shares;
u) where the Placee is acquiring Placing Shares for one or more
managed accounts, represents and warrants that it is authorised in
writing by each managed account: (a) to acquire the Placing Shares
for each managed account; (b) to make on its behalf the
representations, warranties, acknowledgments, undertakings and
agreements in this Announcement (including the Appendix); and (c)
to receive on its behalf any investment letter relating to the
Placing in the form provided to it by the Relevant Co-Lead
Manager;
v) the Placee undertakes that it (and any person acting on its
behalf) will make payment for the Placing Shares allocated to it in
accordance with this Announcement (including the Appendix) on the
due time and date set out herein and has obtained all necessary
consents and authorities to enable it to give its commitment so to
subscribe, failing which the relevant Placing Shares may be placed
with other placees or sold as the Relevant Co-Lead Manager may in
its sole discretion determine and without liability to such Placee
and it will remain liable for any shortfall below the net proceeds
of such sale and the placing proceeds of such Placing Shares and
may be required to bear any stamp duty or stamp duty reserve tax
which may arise upon the placing or sale of such Placee's Placing
Shares on its behalf;
w) the Placee understands and agrees that there may be material
tax consequences to the Placee of an acquisition or disposition of
any of the Placing Shares. Neither the Company nor any of the
Co-Lead Managers gives any opinion or makes any representation with
respect to the tax consequences to the Placee under United States,
state, local or other tax law of the Placee's acquisition or
disposition of such securities. In particular, no determination has
been made whether the Company will be a "passive foreign investment
Company" within the meaning of Section 1291 of the United States
Internal Revenue Code;
x) the Placee's obligations under the Placing are valid, binding
and enforceable and the Placee has all necessary capacity and
authority, and has obtained all necessary consents and authorities
to enable it to perform its obligations in relation to the Placing
and will honour its obligations (including, without limitation, in
the case of any person on whose behalf it is acting, all necessary
consents and authorities to agree to the terms set out or referred
to in this Announcement);
y) if required by applicable securities laws or as otherwise
reasonably requested by the Company, the Placee will execute,
deliver and file and otherwise assist the Company in filing
reports, questionnaires, undertakings and other documents with
respect to the issue of the Placing Shares;
z) if a Placee is a person whose ordinary activities involve it
in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of its business or that it
will acquire, hold, manage and dispose (as principal or agent) of
those of the Placing Shares to be subscribed by it for the purposes
of its business;
aa) the Placee will not prior to Admission make any offer to the
public of those of the Placing Shares to be subscribed for by it
for the purposes of Section 102B FSMA;
bb) the Placee represents and warrants that it has only
communicated or caused to be communicated and will only communicate
or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the
FSMA) relating to the Placing Shares in circumstances in which
section 21(1) of the FSMA does not require approval of the
communication by an authorised person;
cc) the Placee represents and warrants that it has complied and
will comply with all applicable provisions of the FSMA with respect
to anything done by it in relation to the Placing Shares in, from
or otherwise involving, the United Kingdom;
dd) in agreeing to subscribe for the Placing Shares the Placee
is acting as principal and for no other person and its acceptance
of that commitment will not give any other person a contractual
right to require the issue by the Company of any of the Placing
Shares;
ee) the Placee represents and warrants that the issue to it, or
the person specified by it for registration as holder, of Placing
Shares will not give rise to a liability under any of sections 67,
70, 93 or 96 of the Finance Act 1986 (depositary receipts and
clearance services) and that the Placing Shares are not being
acquired in connection with arrangements to issue depositary
receipts or to transfer Placing Shares into a clearance system;
ff) the Placee undertakes that the person whom it specifies for
registration as holder of the Placing Shares will be: (a) itself;
or (b) its nominee, as the case may be. Neither the Co-Lead
Managers nor the Company will be responsible for any liability to
stamp duty or stamp duty reserve tax or securities transfer tax
resulting from a failure to observe this requirement. Each Placee
and any person acting on behalf of such Placee agrees to
participate in the Placing and it agrees to indemnify the Company
and the Co-Lead Managers in respect of the same on the basis that
the Placing Shares will be allotted to the CREST account of the
Relevant Co-Lead Manager or its affiliate or agent who will hold
them as nominee on behalf of such Placee until settlement in
accordance with its standing settlement instructions;
gg) the Placee acknowledges that the money will not be subject
to the protections conferred by the client money rules and as a
consequence, this money will not be segregated from the Relevant
Co-Lead Manager's money in accordance with the FCA's Client Money
Rules and will be used by the Relevant Co-Lead Manager in the
course of its own business; and the Placee will rank only as a
general creditor of the Relevant Co-Lead Manager;
hh) the Placee agrees to be bound by the terms of the memorandum
and articles of association of the Company in force immediately
after Admission;
ii) the Placee acknowledges that time shall be of the essence as
regard obligations pursuant to its participation in the
Placing;
jj) the Placee agrees that the Company and the Co-Lead Managers
and their respective affiliates and agents and others will rely
upon the truth and accuracy of the foregoing representations,
warranties, acknowledgments and undertakings which are given to the
Co-Lead Managers on its behalf or on behalf of the Company and are
irrevocable;
kk) the Placee confirms the Relevant Co-Lead Manager's absolute
discretion with regard to the Placing Agreement and agrees that the
Relevant Co-Lead Manager owes it no fiduciary duties in respect of
any claim it may have relating to the Placing;
ll) the Placee is not relying on any information or
representation in relation to the Company or the Placing Shares by
the Company or any director, employee or agent of the Company or
any other person except for information set out in this
Announcement including this Appendix, accordingly, the Placee
agrees that neither the Company nor the Co-Lead Managers, including
employees or agents nor any person acting on behalf of any of the
Co-Lead Managers or the Company shall have any liability for any
other information provided, or representation made, to it; and
mm) the Placee acknowledges that Stifel is acting as bookrunner,
and each of Stifel and Panmure Gordon are acting as co-lead
manager, exclusively for the Company and no one else in connection
with the Placing and will not regard any other person as its client
in relation to the Placing and will not be responsible to anyone
other than the Company for providing the protections afforded to
its respective clients or for providing advice in relation to the
Placing or any matters referred to in this Announcement (including
the Appendix). Apart from the responsibilities and liabilities, if
any, which may be imposed on either Co-Lead Manager by FSMA, as
amended or the regulatory regime established thereunder, each
Co-Lead Manager accepts no responsibility whatsoever, and makes no
representation or warranty, express or implied, for the contents of
this Appendix including its accuracy, completeness or verification
or for any other statement made or purported to be made by it, or
on behalf of it, the Company or any other person, in connection
with the Company and the Placing and nothing in this Appendix shall
be relied upon as a promise or representation in this respect,
whether as to the past or the future. Each Co-Lead Manager
accordingly disclaims all and any liability whatsoever, whether
arising in tort, contract or otherwise (save as referred to above),
which it might otherwise have in respect of the Placing, this
document or any such statement.
9. Entire Agreement
The terms set out in this Announcement (including the Appendix)
and the allocation of Placing Shares (including the subscription
amount payable) as confirmed to a Placee, constitute the entire
agreement to the terms of the Placing and a Placee's participation
in the Placing to the exclusion of prior representations,
understandings and agreements between them. Any variation of such
terms must be in writing.
10. Governing Law and Jurisdiction
The agreement arising out of acceptance of the Placing and any
dispute or claim arising out of or in connection with the Placing
or formation thereof (including non-contractual disputes or claims)
shall be governed by and construed in accordance with the laws of
England. Each Placee irrevocably agrees to submit to the exclusive
jurisdiction of the courts of England to settle any claim or
dispute that arises out of or in connection with the agreement
arising out of acceptance of the Placing or its subject matter or
formation (including non-contractual disputes or claims).
Appendix 2 - Certain Risks
Any investment in the Company is subject to a number of risks.
Accordingly, prospective investors should carefully consider the
risks set out below as well as the other information contained in
this Announcement and any other publicly available information
about the Company before making a decision whether to invest in the
Company. The risks described below are not the only risks that the
Company faces. Additional risks and uncertainties that the
Directors are not aware of or that the Directors currently believe
are immaterial may also impair the Company's operations. Any of
these risks may have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.
In that case, the price of the Ordinary Shares could decline and
investors may lose all or part of their investment. Prospective
investors should consider carefully whether an investment in the
Company is suitable for them in light of the information in this
document and their personal circumstances.
Before making an investment, prospective investors are strongly
advised to consult an investment adviser authorised under FSMA who
specialises in investments of this kind. A prospective investor
should consider carefully whether an investment in the Company is
suitable in the light of his or her personal circumstances, the
financial resources available to him or her and his or her ability
to bear any loss which might result from such investment.
The following factors do not purport to be a complete list or
explanation of all the risks involved in investing in the Company.
In particular, the Company's performance may be affected by changes
in the market and/or economic conditions and in legal, regulatory
and tax requirements.
1. RISKS RELATING TO THE COMPANY'S BUSINESS
1.1. The Company may not be able to develop commercially its
Resource base
The Company is an oil and gas exploration company which has not
yet begun to generate revenues and is not yet trading profitably.
None of the assets has achieved commercial production to date and
the commercial viability of each of the Company's assets is
dependent on a range of factors, including further technical
evaluation and establishing commercial production.
The Company's success will depend upon the successful
development, sustained commercial production, and converting its
assets that are currently classified as Prospective Resources into
Reserves, and commercial production. The Reserves and Resources may
not be considered commercially recoverable by the Company for a
variety of reasons, including the costs involved in recovering the
Reserves and Resources, the price of oil and gas at the time, the
availability of the Company's operational resources and other
development plans that the Company may have.
If the Company is not successful in achieving commercial
production from its assets, or fails to meet its targeted
development and production timelines, the Company's business,
financial condition, results of operations and prospects would be
materially adversely affected.
1.2. The Company's business plan requires capital expenditure in
the future and the expansion and development of the Company's
business may require additional capital. As such, the Company may
not be able to generate sufficient cash flows or finance its
activities in the longer term if it is unable to raise additional
capital
The Company's business plan to exploit and commercialise its
assets will require significant capital expenditure. The Company
has good visibility of its near-term capital expenditure
requirements which are supported by detailed internally produced
work programmes and budgets. These work programmes and budgets
detail, inter alia, the necessary equipment, personnel and time
lines for such programmes, and estimates for the year's expenditure
based on the current market rates plus appropriate
contingencies.
However, in the longer term, future work programme and budgets
may turn out to be higher than currently planned by the Company
(for example, for reasons of oil industry-wide cost inflation,
project delays or redesign, new technology, acceleration of work
programmes, drilling, development and/or decommissioning and other
operations) and the Company may need to seek additional funds at
that time to cover increased costs or the fact that the Company may
no longer be tax optimised as planned due to unforeseen or earlier
than expected costs, which it may not be able to secure on
reasonable commercial terms or at all or it may need to divert
funds from other projects to satisfy the increased capital
expenditure requirements. If this happens, it may have a material
adverse effect on the Company's business and financial condition in
the longer term.
More generally, the Company may not be able to generate
sufficient cash flows or finance its activities in the longer term
if it is unable to raise additional capital. The Company's
inability to access sufficient capital for its operations may have
a material adverse effect on its business, financial condition,
results of operations and prospects.
1.3. The Company's operation and success depends on its ability
to explore, appraise, develop and commercially produce oil and gas
Reserves and Resources that are economically recoverable
The Company's long-term commercial success depends on its
ability to explore, appraise, develop and commercially produce oil
and gas Resources. Future increases in the Company's Resources or
conversion of any of them into Reserves will depend not only on its
ability to explore, appraise and develop its existing assets but
also on its ability to select and acquire suitable additional
assets.
There are many reasons why the Company may not be able to find
or acquire oil and gas Reserves or Resources or develop them for
commercially viable production. For example, the Company may be
unable to negotiate commercially reasonable terms for its
acquisition, appraisal, development or production activities.
Factors such as adverse weather conditions, natural disasters,
equipment or services shortages, procurement delays or difficulties
arising from the political, environmental and other conditions in
the areas where the Reserves or Resources are located or through
which the Company's products are transported may increase costs and
make it uneconomical to develop potential Reserves or Resources. As
a result, the Company may incur cost overruns or may be required to
curtail, delay or cancel installation, commissioning, production
and drilling operations because of many factors, including
unexpected operating conditions, unforeseeable operating problems,
irregularities in geological formations, equipment failures or
accidents, adverse weather conditions, compliance with
environmental regulations, governmental requirements and shortages
and delays in the availability of drilling rigs and the delivery of
equipment. Without successful development and operation, and
successful acquisition or exploration activities, the Company's
Reserves, Resources, production and revenues (if achieved) will
decline. There is no assurance that the Company will discover,
acquire, develop or produce commercial quantities of
hydrocarbons.
In addition, there can be no assurance that the Company will be
able to develop its Resources for commercial viable production.
Such challenges and the failure to develop its Resources for
commercial viable production could have a material adverse effect
on the Company's business, financial condition, results of
operations and prospects.
1.4. The Company's operations are dependent on the availability
of drilling and other equipment and independent contractors
The Company's operations are dependent on the availability of
rigs, long lead items and equipment, and third party services. The
Company contracts or leases services and equipment from third party
providers and suppliers. Such equipment and services may be scarce
and may not be readily available at the times and places required
and/or the specific service providers that the Company wishes to
engage with may not be available at the relevant times. Even where
the Company has secured rigs under a contract, the rigs will
usually only be available for use after the previous user has
finished its work programme. If there are delays in the completion
of the previous user's work programme, the Company could be delayed
in procuring contracted rigs.
The scarcity of third party services and equipment as well as
any increases in their costs, together with the failure of a
third-party provider or supplier to perform its contractual
obligations, or an inability to achieve a commercially viable
contract with a third-party provider or supplier could delay,
restrict or lower the profitability and viability of the Company's
activities. This could have a material adverse effect on the
Company's business, financial condition, results of operations and
prospects.
1.5. The Company may be unable to acquire, retain or renew the
leases, permits and other regulatory approvals necessary for its
operations
The ability of the Company to develop and exploit oil and gas
Resources depends on the Company's continued compliance with the
obligations of its lease agreements. The Company depends on leases
whose grant and renewal is subject to the discretion of land owners
and cannot be assured. Renewal is not required for unit acreage of
the Company on producing wells, which are held by production.
There can also be no assurance that the Company will be able to
identify suitable acquisition opportunities or that the Company
will be able to make such acquisitions on appropriate terms.
1.6. Future litigation could adversely affect the Company's
business, results of operations or financial condition
Damages and/or other remedies claimed under any litigation are
difficult to predict, and may be material. The outcome of such
litigation may materially impact the Company's business, financial
condition, results of operations and prospects. While the Company
will assess the merits of each lawsuit and defend itself
accordingly, it may be required to incur significant expenses or
devote significant resources to defending itself against such
litigation. In addition, adverse publicity surrounding such claims
may have a material adverse effect on the Company's business,
financial condition, results of operations and prospects.
1.9. The Company is subject to risks relating to its working
interest partner and anticipated timetables may not be achieved
Oil and gas operations globally are typically conducted in
conjunction with other companies. The Company's assets are operated
in joint venture with Vision, who is operator of the Company's
assets. The ability of the Company to influence its partners will
sometimes be limited. As such, the Company's anticipated timetables
in all of its current and expected operations are the Directors'
estimates based on a number of variables not all of which are under
the Company's direct control. The Company is dependent upon the
operators of its assets to act in accordance with agreed plans in
respect of each of the assets but the Company has no control over
such persons save through contractual terms which may be costly,
time consuming or impossible to enforce. There is a risk that the
Company's partners may elect not to participate in or may not be
able to fund certain activities relating to projects and which
require that party's consent, including those wells which the
Company expects to be drilled, but has not yet committed to, as
part of its drilling programme. In these circumstances it may not
be possible for such activities to be undertaken by the Company
alone or in conjunction with other participants at the desired time
or at all. Furthermore, if the timetable estimates prove to be
wrong or the operator does not take the actions in relation to
maintaining or developing the assets then it may lead to delays or
further problems which may have a material adverse effect on the
Company's business. The bankruptcy, failure or default of a joint
venture partner could result in the Company's share of one or more
projects' liabilities and/or costs increasing unexpectedly and have
a material adverse effect of the Company's business.
1.10. Reliance on third party infrastructure
The Company's activities and business model of field development
are dependent upon the current and future availability of third
party infrastructure which if it fails, or is not, or ceases to be,
available on reasonable commercial terms, or at all, may result in
delays to field development and production or impossibility of
field development and production which would result in delayed,
lower than expected or no cash generation by the Company. This
would have a material adverse effect on the Company's business,
prospects, financial condition and operations.
2. RISKS RELATED TO THE OIL AND GAS INDUSTRY
2.1. A material decline in oil and gas prices may adversely
affect the Company's results of operations and financial condition,
and prices may not return to levels seen in recent years
Both oil and gas prices can be volatile and subject to
fluctuation in response to relatively minor changes in the supply
of, and demand for, oil and gas, market uncertainty and a variety
of additional factors that are beyond the control of the Company.
Historically and indeed recently, oil and gas prices have
fluctuated widely for many reasons, including global and regional
supply and demand; political, economic and military developments,
and labour unrest, in oil and gas producing regions, particularly
the Middle East; domestic and foreign governmental regulations and
actions; global and regional economic conditions and weather
conditions and natural disasters. It is impossible to predict
accurately future oil and gas price movements. Accordingly, oil and
gas prices may not remain at their current levels. Although the
Company is not yet an active producer of oil and gas, declines in
oil and gas prices may adversely affect market sentiment and as a
consequence the market price of the Ordinary Shares and furthermore
affect the Company's cash flow, liquidity and profitability, and
limit the amount of oil and gas that the Company could potentially
market in the future.
Although oil and gas prices have fallen significantly since
mid-2014, they may not return to levels previously seen within any
foreseeable timeframe.
The Company can give no assurance that future prices for oil and
gas will be sufficient to generate an economic return. Any further
decline in such prices could result in reduced cash flows from the
Company's assets and a reduction in the valuation of the Company's
assets, which in turn may result in a reduction in the debt
available to the Company. This would have a material adverse effect
on the Company's financial condition, business, prospects and
results of operations.
2.2. Estimation of Reserves, Resources and production profiles
is not exact
The estimation of oil and gas Reserves, Resources, and their
anticipated production profiles, involves subjective judgements and
determinations based on a number of variable factors and
assumptions, such as expected reservoir characteristics based on
geological, geophysical and engineering assessments, future
production rates based on historical performance and expected
future operating investment activities, future oil and natural gas
prices and quality differentials, production rates, ultimate
reserve recovery, timing and amount of capital expenditures,
marketability of oil and gas, royalty rates, the assumed effects of
regulation by governmental agencies and future operating costs, all
of which may vary materially from actual results. They are not
exact determinations and are inherently uncertain. In addition,
these judgements may change based on new information from
production or drilling activities or changes in economic factors,
as well as from developments such as acquisitions and disposals,
new discoveries and extensions of existing fields and the
application of improved recovery techniques. Published reserve
estimates are also subject to correction for errors in the
application of published rules and guidance.
The Reserves, Resources and production profile data contained in
this document are estimates only and should not be construed as
representing exact quantities. They are based on production data,
prices, costs, ownership, geophysical, geological and engineering
data, and other information assembled by the Company. The estimates
may prove to be incorrect and potential investors should not place
undue reliance on the forward-looking statements contained in this
document concerning the Company's Reserves and Resources or
production levels.
If the assumptions upon which the estimates of the Company's
Reserves, Resources or production profiles have been based prove to
be incorrect, the Company may be unable to recover and produce the
estimated levels or quality of oil and gas set out in this document
and this may have a material adverse effect on the Company's
business.
2.3. The Company may miss out on operational opportunities if it
is unable to successfully co-ordinate its development, appraisal
and exploration projects
The Company's operational projects require key asset delivery
personnel to be resourced and the co-ordination of a number of
activities including obtaining rigs, long lead items and equipment
necessary for its work programmes and drilling. A failure to
procure these items in a timely manner may delay operations and
increase expenditure. If the Company or operator fails to
successfully obtain the necessary personnel in time or to
co-ordinate the timely delivery or completion, as the case may be,
of any of its planned activities, it may miss out on operational
opportunities or may be required to incur additional
expenditure.
2.4. Development, exploration and appraisal projects do not
necessarily result in a profit on the investment or the recovery of
costs
Development, exploration and appraisal activities are capital
intensive and inherently uncertain in their outcome. The Company's
oil and gas development, exploration and appraisal projects may
involve unprofitable efforts, either from dry wells or from wells
that are productive but do not produce sufficient net revenues to
return a profit after development, operating and other costs.
Completion of a well does not guarantee a profit on the investment
or recovery of the costs associated with that well. In addition,
drilling hazards or environmental damage could greatly increase the
cost of operations, and various field operating conditions may
adversely affect the production from successful wells. These
conditions include delays in obtaining consents, shut-ins of
connected wells, insufficient storage or transportation capacity,
adverse geological conditions and technical and operational
difficulties (including operational difficulties in avoiding
drilling fluid losses and preventing substantial formation
damage
during drilling) and other factors. While diligent well
supervision, reservoir management and effective maintenance
operations can contribute to maximising production rates over time,
production delays and declines from normal field operating
conditions cannot be eliminated and may adversely affect the
Company's business, financial condition, results of operations and
prospects.
2.5. The Company's operations are subject to a number of risks
and hazards that may result in material losses in excess of
insurance proceeds
Oil and gas exploration, development and production operations
are inherently risky and hazardous. Risks typically associated with
these operations include unexpected formations or pressures,
premature decline of reservoirs, drilling damage (which can lead to
reduced productivity), early water encroachment and the intrusion
of water into producing formations. Losses resulting from the
occurrence of any of these risks could have a material adverse
effect on the Company's business, financial position, results of
operations and prospects. Hazards typically associated with oil and
gas exploration, development and production operations include
fires, explosions, blowouts, gas leaks and oil spills, each of
which could result in substantial damage to oil and gas wells,
production facilities, other property and the environment or in
personal injury or could result in government intervention which
could in turn negatively impact on the Company's operations.
Although the Company will exercise due care in the conduct of
its business and usually obtains (itself or through the operator)
insurance prior to drilling in accordance with industry standards
to cover certain of these risks and hazards, insurance is subject
to limitations on liability and, as a result, may not be sufficient
to cover all of the Company's losses. In addition, the risks or
hazards associated with the Company's operations may not in all
circumstances be insurable or, in certain circumstances, the
Company may elect not to obtain insurance to deal with specific
events due to the high premiums associated with such insurance or
for other reasons. The occurrence of a significant event against
which the Company is not fully insured, or the insolvency of the
insurer of such event, could have a material adverse effect on the
Company's business, financial condition, results of operations and
prospects.
2.6. The Company is subject to regulatory requirements
Businesses in the USA are subject to regulations and approvals
of governmental authorities, including those relating to the
exploration, development, operation, production, marketing,
pricing, transportation and storage of oil and gas,
decommissioning, taxation, environmental, and health and safety
matters.
The Company will have limited control over whether or not
necessary approvals or leases (or renewals thereof) are granted by
the government or land owners, the timing of obtaining (or
renewing) such leases or approvals, the terms on which they are
granted or the tax regime to which the Company or the assets in
which the Company has interests will be subject. As a result, the
Company may have limited control over the nature and timing of
exploration and development of oil and gas fields in which the
Company has or seeks interests.
Amendments to current laws, regulations and permits,
authorisations, consents and approvals governing operations and
activities of oil and gas companies, or more stringent
implementation thereof, could result in increases of capital
expenditure or production costs, installation of additional
equipment, remedial actions or a reduction in levels of production
from producing properties or require abandonment or delays in
development of new properties, all of which could have a materially
adverse effect on the Company's business, financial condition,
prospects and results of operations.
Parties engaged in oil and gas operations may be required to
compensate those suffering loss or damage by reason of such
activities and may have civil or criminal fines or penalties
imposed for violations of applicable laws or permits.
2.7. The Company's operations expose it to significant
compliance costs and liabilities in respect of EHS matters
The Company's operations and assets are affected by numerous
laws and regulations concerning EHS matters including, but not
limited to, those relating to discharges of hazardous substances
into the environment, the handling and disposal of waste and the
health and safety of employees. The technical requirements of these
laws and regulations are becoming increasingly complex, stringently
enforced and expensive to comply with and this trend is likely to
continue. Any failure to comply with EHS laws and regulations may
result in regulatory action (which strict, joint and several
liability can include statutory orders requiring steps to be taken
or prohibiting certain operations), the imposition of fines or the
payment of compensation to third parties. All of these liabilities
and any other regulatory actions could have a material adverse
effect on the Company's business, financial condition, results of
operations and prospects.
2.8. The Company operates in a competitive industry
The Company competes for scarce resources with numerous other
participants, including major international oil and gas companies,
in the search for and the acquisition of oil and gas assets, and in
the marketing of oil and gas. The Company's ability to increase
Resources and Reserves will depend not only on its ability to
exploit and develop its present assets but also on its ability to
select and acquire suitable producing assets or prospects for
exploratory or appraisal drilling. A number of the Company's
competitors have substantially greater financial and personnel
resources. Larger and better capitalised competitors may be in a
position to outbid the Company for particular licences and such
competitors may be able to secure rigs for drilling operations
preferentially to the Company. These competitors may also be better
able to withstand sustained periods of unsuccessful drilling or
production. Larger competitors may be able to absorb the burden of
any changes in law and regulations more easily than the Company,
which would adversely affect its competitive position. In addition,
many of the Company's competitors have been operating for a much
longer time and have demonstrated the ability to operate through
industry cycles.
Generally, risk is reduced through diversification.
Diversification is maximised for example by drilling a large number
of wells on a large number of exploration prospects having
differing geological characteristics, in differing regulatory
jurisdictions. The Company's current strategy is heavily focussed
in Tyler County and Polk County, East Texas, and therefore has
limited diversification in terms of the jurisdictions that it
operates in.
2.9. Macroeconomic risks could result in an adverse impact on
the Company's financial condition
Global economic slowdowns may adversely affect the Company's
major operations. The links between economic activities in
different markets and sectors are complex and depend not only on
direct drivers such as the balance of trade and investment between
countries, but also on domestic monetary, fiscal and other policy
responses to address macroeconomic conditions.
2.10. Risk of crime and corruption
Oil and gas companies have been known to experience high levels
of criminal activity and governmental and business corruption. They
may be particular targets of criminal or terrorist actions.
Criminal, corrupt or terrorist action against the Company and its
directly or indirectly held assets or facilities could have a
material adverse impact on the Company's business, results of
operations or financial condition. In addition, the fear of
criminal or terrorist actions against the Company could have an
adverse effect on the ability of the Company to adequately staff
and/or manage its operations or could substantially increase the
costs of doing so.
The Company is not aware of any current or threatened
investigations relating to or any adverse findings against the
Company or any of its directors, employees, officers or lease
partners. If any such investigations are made and substantiated in
future against the Company, its directors, officers, employees or
potentially its lease partners, or such persons are found to be
involved in corruption or other illegal activity, this could result
in criminal or civil penalties, including substantial monetary
fines, against the Company, its directors, officers or employees.
Any such findings in the future could damage the Company's
reputation and its ability to do business and could adversely
affect its financial condition and results of operations.
Furthermore, alleged or actual involvement in corrupt practices or
other illegal activities by any lease partners of the Company, or
others with whom the Company directly or indirectly conducts
business, could also damage the Company's reputation and business
and adversely affect the Company's financial condition, results of
operations and prospects.
2.11. The Company is subject to cyber risks
The Company is at risk of financial loss, reputational damage
and general disruption from a failure of its IT systems or an
attack for the purposes of espionage, extortion, terrorism or to
cause embarrassment. Any failure of, or attack against, the
Company's IT systems may be difficult to prevent or detect, and the
Company's internal policies to mitigate these risks may be
inadequate or ineffective. The Company may not be able to recover
any losses that may arise from a failure or attack.
3. RISKS RELATING TO THE ORDINARY SHARES
3.1. Future sales of Ordinary Shares could adversely affect the
market price of the Ordinary Shares
Sales of additional Ordinary Shares into the public market
following the Placing could adversely affect the market price of
the Ordinary Shares if there is insufficient demand for the
Ordinary Shares at the prevailing market price.
3.2. The Placing Shares will give rise to dilution for
Shareholders
The Placing Shares will give rise to dilution for Shareholders.
The effect of the Placing will be to reduce the proportionate
ownership and voting interests in the Ordinary Shares of holders of
Existing Ordinary Shares. As a result, a Shareholder that does not
participate in the Placing will experience a dilution in its
interest as a result of the Placing.
3.3. The issuance of additional Ordinary Shares in the Company
in connection with future fundraising activities or otherwise may
dilute all other shareholdings and may impact the price of the
Ordinary Shares
The Company may seek to raise financing to fund other growth
opportunities, invest in its business, or for general corporate
purposes. Issuing additional equity securities or debt securities
convertible into equity securities may be a more attractive option
for the Company than debt financings. Any additional equity
financings, depending on structure, would likely result in dilution
in the percentage ownership of Shareholders and may involve the use
of securities that have rights, preferences, or privileges senior
to the Ordinary Shares which may adversely affect the price of the
Ordinary Shares.
3.4. There is no public market for the securities of the Company
in the United States or elsewhere outside the United Kingdom
The securities to be issued pursuant to the Placing will not be
registered under the US Securities Act or the relevant laws of any
state or other jurisdiction of the United States or those of any
restricted jurisdictions and Placing Shares may not be resold,
transferred or delivered, directly or indirectly, within such
jurisdictions except pursuant to an applicable exemption from the
registration requirements of the US Securities Act and in
compliance with any other applicable securities laws. The Company
has no intention to list or to apply for admission to trading of
securities on any securities exchange or interdealer quotation
system other than AIM. As a consequence, an active trading market
is not expected to develop for the securities outside the United
Kingdom and investors may not be able to sell the Ordinary Shares
or achieve an acceptable price. As a prospective purchaser, you
should be aware that you may be required to bear the financial
risks of this investment for an indefinite period of time.
3.5. Pre-emption rights may not be available to Overseas
Shareholders of Ordinary Shares
In the case of certain increases in the Company's issued share
capital, holders of Ordinary Shares have the benefit of statutory
pre-emption rights to subscribe for such shares, unless
Shareholders waive such rights by a resolution passed at a
Shareholders' meeting, or in certain other circumstances. United
States and other overseas holders of shares are very likely to be
excluded from exercising any such pre-emption rights they may have,
unless a registration statement under the US Securities Act is
effective with respect to those rights, or an exemption from the
registration requirements under the US Securities Act is available.
The Company is unlikely to file any such registration statement,
and the Company cannot assure prospective investors that any
exemption from those registration requirements would be available
to enable United States or other overseas shareholders to exercise
such pre-emption rights or, if available, that the Company will
utilise any such exemption.
3.6. Investors may be exposed to fluctuations in currency
exchange rates
The Ordinary Shares are priced in pounds sterling, and will be
quoted and traded in pounds sterling. Accordingly, Shareholders
resident in non-UK jurisdictions are subject to risks arising from
adverse movements in the value of their local currencies against
pounds sterling, which may reduce the value of the Ordinary Shares.
This is particularly relevant given the uncertainty around the UK's
exit from the European Union.
3.7. The ability of Overseas Shareholders to bring actions or
enforce judgements against the Company or the Directors may be
limited
The ability of an Overseas Shareholder to bring an action
against the Company may be limited under law. The Company is a
public limited company incorporated in England and Wales. The
rights of holders of Ordinary Shares are governed by English law
and by the Articles. These rights differ from the rights of
shareholders in typical US corporations and some other non-UK
corporations. An Overseas Shareholder may not be able to enforce a
judgement against the Company, the Company or some or all of the
Directors and executive officers. Consequently, it may not be
possible for an Overseas Shareholder to effect service of process
upon the Company or the Directors and executive officers within the
Overseas Shareholder's country of residence or to enforce against
the Company or the Directors and executive officers within the
Overseas Shareholder's country of residence or to enforce against
the Company or the Directors and executive officers' judgements of
courts of securities laws. There can be no assurance that an
Overseas Shareholder will be able to enforce any judgements in
civil and commercial matters or any judgements under the securities
laws of countries other than the UK against the Company or the
Directors or executive officers who are residents of the UK or
countries other than those in which judgement is made. In addition,
English or other courts may not impose civil liability on the
Company or the Directors or executive officers in any original
action based solely on foreign securities laws brought against the
Company or the Directors in a court of competent jurisdiction in
England or other countries.
3.8. The Company's securities may not be suitable as an
investment
The Company's Ordinary Shares may not be a suitable investment
for all investors. Before making a final decision, investors are
advised to consult an independent investment adviser authorised
under the FSMA who specialises in advising on the acquisition of
shares and other securities. The value of the Company's securities
and any income received from them can go down as well as up and
investors may get back less than their original investment.
3.9. The Company's Ordinary Shares are traded on AIM rather than
the Official List
The Existing Ordinary Shares are, and the Placing Shares will
be, traded on AIM rather than the Official List. An investment in
shares traded on AIM may carry a higher risk than those listed on
the Official List. The market price of the Ordinary Shares may be
subject to wide fluctuations in response to many factors, including
variations in the operating results of the Company, divergence in
financial results from analysts' expectations, changes in estimates
by stock market analysts, general economic conditions, overall
market or sector sentiment, legislative changes in the Company's
sector and other events and factors outside of the Company's
control. Stock markets have from time to time experienced severe
price and volume fluctuations, a recurrence of which could
adversely affect the market price for the Ordinary Shares.
Prospective investors should be aware that the value of the
Ordinary Shares may be volatile and could go down as well as up,
and investors may therefore not recover their original investment
especially as the market in the Ordinary Shares may have limited
liquidity. Admission to AIM should not be taken as implying that
there will be a liquid market for the Ordinary Shares.
3.10. The Company's share price fluctuates
The market price of the Ordinary Shares could be subject to
significant fluctuations due to a change in sentiment in the market
regarding the Ordinary Shares (or securities similar to them). Such
risks depend on the market's perception of the likelihood of
success of the Placing, and/or may occur in response to various
facts and events, including any variations in the Company's
operating results, business developments of the Company and/or its
competitors. Stock markets have, from time to time, experienced
significant price and volume fluctuations that have affected the
market prices for securities and which may be unrelated to the
Company's operating performance or prospects. Furthermore, the
Company's operating results and prospects from time to time may be
below the expectations of market analysts and investors. Any of
these events could result in a decline in the market price of the
Ordinary Shares and investors may, therefore, not recover their
original investment.
Any sale of Ordinary Shares could have an adverse effect on the
market price of the Ordinary Shares. Furthermore, it is possible
that the Company may decide to offer additional shares in the
future. An additional offering could also have an adverse effect on
the market price of the Ordinary Shares.
3.11. The Company does not plan on making dividend payments in
the foreseeable future
There can be no assurance as to the level of future dividends.
The declaration, payment and amount of any future dividends of the
Company are subject to the discretion of the Directors and will
depend on, among other things, the Company's results of operations
and financial condition, its future business prospects, any
applicable legal or contractual restrictions and availability of
profits. A dividend may never be paid and, at present, there is no
intention to pay a dividend.
The risks above do not necessarily comprise all those faced by
the Company and are not intended to be presented in any assumed
order of priority. The investment offered in this document may not
be suitable for all of its recipients. Investors are accordingly
advised to consult an investment adviser, who is authorised under
the FSMA if you are resident in the United Kingdom or, if not, from
another appropriate authorised independent financial adviser and
who or which specialises in investments of this kind before making
a decision to apply for Placing Shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOERRMATMBATBIR
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July 27, 2017 12:00 ET (16:00 GMT)
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