Shares in President Energy (PPC) fell by a fifth after the frontier oil explorer announced a $50m (£31m) placing with institutional investors and a $6.7m open offer to existing shareholders at 35p a share - a significant discount to the 47p price the shares traded at immediately prior to the announcement.
The company will use the money to complete a three-well exploration drilling programme in Paraguay this year. The first well is scheduled to spud in May. President's chairman Peter Levine said the placing "will significantly strengthen our financial position and allow us to progress our expanded exploration activities this year". Mr Levine has agreed to acquire 4.35m shares in the placing through his private investment company at a cost of around £1.5m. It's the latest in a series of financings backed by Mr Levine, who made serious money for both himself and his investors when he sold Imperial Energy, a Russian oil producer, to an Indian oil group for £1.4bn in 2009. Mr Levine will control roughly 19.5 per cent of the company's shares following the dilutive financing, down from 27 per cent.
President owns interests in small producing fields in Argentina and Louisiana, but entered under-explored Paraguay last year and has since completed extensive seismic work. The company says its high-risk prospects could hold as much as 4.1bn barrels of oil in a best-case scenario, or 1.1bn in a mid-case success scenario, based on comparisons with similar proven fields across the border in Argentina.
