Central Petroleum extends SPP to allow for Surprise 1 horizontal drilling results

Central Petroleum (ASX: CTP) has announced a final extension to the company’s share purchase plan (SPP) to January 25, 2012, due to the continuation of horizontal drilling and testing operations at the Surprise 1 ST-1 well.

The company announced the underwritten SPP, which aims to raise $5.5 million, on September 15, 2011.

Funds raised through the plan will be used to progress Central’s liquids focussed drilling program and to provide working capital.

The previous closing date for the share purchase plan was December 16, which comes during the planned horizontal drilling, flow testing and evaluation phase of Surprise 1 ST-1.

The company re-entered the well on Saturday November 18, looking for oil potential in both conventional and unconventional horizons.

Past estimates, confirmed by independent consultant RPS Energy, indicate that one 9 metre zone in the already drilled section of Surprise-1 could flow at 500-1,000 barrels per day.

By extending the closing date for the deal, Central hopes to give shareholders the opportunity to fully consider the final drilling and testing results from the well.

Eligible shareholders can purchase shares to a value of $2,500, $5,000, $7,500, $10,000 or $15,000, at an 18% discount to the average closing price of shares in the five days prior to the announcement of the share purchase plan on September 15 2011.

Importantly, Patersons Securities has advised that the Underwriting Agreement for the first $5.5 million of the plan could be extended to the revised closing date, pursuant to terms of the agreement, including market conditions.

The SPP followed a successful capital raising that saw sophisticated and institutional investors take up 91 million shares at $0.055 per share, for a total $5 million.

Funds from the capital raising were intended to support a planned Toronto Stock Exchange Listing, which would align Central with other central Australian focussed TSX listed companies with comparable acreage positions and resource potential.

New unconventional acreage and future plans

Central recently uncovered up to 260,000 square kilometres of additional unconventional targets in the Amadeus, Eromanga, Wiso and Pedirka Basins in central Australia, through a review of historical and recent data.

This could increase the company’s total area of unconventional play potential to more than 307,000 square kilometres.

At the Surprise 1 well, Central is planning to conduct a horizontal wellbore test of the Lower Stairway Sandstone, following positive results from the interpretation of electric logs, cuttings sampling, gas chromatography and coring.

The company has Prospective Reserves in the Amadeus Basin of 5.9 billion barrels of oil equivalent from conventional and unconventional sources, with total Prospective Resources across all basins of 14 billion barrels oil equivalent.

At the end of the September quarter 2011, Central had cash reserves of $13.26 million.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23537/central-petroleum-extends-spp-to-allow-for-surprise-1-horizontal-drilling-results-23537.html