Dominion Petroleum raises £32.7m in placing

Dominion Petroleum Ltd (AIM: DPL), which has exploration interests in central and eastern Africa, said it has raised £32.7 million through a planned placing of new ordinary shares with a broad range of established institutional investors.

It will issue 654.88 million new ordinary shares to new and existing shareholders at a price of 5p per share. The money raised will be applied towards funding Dominion’s drilling programme in the highly prospective Exploration Area 4B (EA4B) in Uganda as well as acquiring seismic in the emerging East African margin play of Offshore Tanzania's Block 7.

As previously reported, according to a report by Energy Resources Consultants Ltd, EA4B in Uganda contains mean unrisked gross recoverable resource of 378 million barrels of oil, net 359 MMbbl to Dominion. Activity in the offshore East African margin is ramping up also with the announcement of a significant discovery by Anadarko Petroleum offshore northern Mozambique last month.

Chief executive Andrew Cochran commented:   "We decided to raise these new funds to enable us to expedite an active and extremely promising exploration and drilling programme at higher working interest levels.  Suitable drilling and seismic equipment is already available in both Uganda and Tanzania such that we should be able to implement the programme within our accelerated timetable."

Dominion already has authority to issue 93.4 million new ordinary shares, pursuant to resolutions passed at the September 2009 AGM. The funds from these shares, totalling £4.7 million, are expected to be received on or around 5 March 2010. The issue of the remaining 561.48 million new shares requires approval from existing shareholders at an EGM, to be held on or around 23 March 2009.

Two weeks ago, Dominion signed an agreement in principle with Les Etablissments Maurel & Prom (M&P) to farm in to the Mandawa and Kisangire production sharing agreements onshore Tanzania, giving M&P additional interests in both projects, while reducing Dominion’s funding obligations.

M&P will gain an additional 40 percent interest in Mandawa PSA to take its total stake in the project to 90 percent, as well as a 35 percent interest in Kisangire, reducing Dominion’s interest in both PSAs to 10 percent. FTSE 250 oil and gas producer Heritage Oil (LSE: HOIL) operates and owns the remaining 55 percent interest in Kisangire.

In return for the additional interests, Dominion will see its funding requirements reduced from 100 percent to 20 percent of the drilling costs and to 10 percent of all associated expenses in respect of the Kianika-1 well on the Mandawa license.

Cochran commented on the M&P deal: “This agreement constitutes active portfolio management and is part of the corporate repositioning recently undertaken. It significantly reduces Dominion's financial commitments for 2010 and allows us to focus more attention on our higher impact exploration assets in Uganda and Offshore Tanzania. We plan to increase activity in these two core areas during the course of this year.”

http://www.proactiveinvestors.co.uk/companies/news/13872/dominion-petroleum-raises-327m-in-placing-13872.html