(MENAFN - ProactiveInvestors - Australia) Quest Petroleum (ASX: QPN) is raising A2.5 million through a fully underwritten Non-Renounceable Entitlement Issue to help fund the drilling program at its Ranau production sharing contract (PSC) onshore South Sumatra.
The issue, which is part of a broader A5 million capital raising, offers shareholders one share priced at A0.006 each for every six held.
One free attaching option exercisable at A0.015 on or before 30 June 2016 will also be issued for every two shares subscribed.
A total of 410 million shares will be offered under the Entitlement Issue.
The Entitlement Issue is fully underwritten by Canaccord Wealth Management with chairman Gus Simpson and managing director Anthony Milewski also subunderwritting part of the issue.
All directors of the company also intend to take up their entitlement.
Quest had previously raised the first A2.5 million through a placement of shares priced at A0.006 each to investors including international and domestic institutions. This also included an attaching option for every two shares placed.
Ranau drilling program
Quest is currently preparing to spud the first well in its initial three well program at the Ranau PSC in December this year, subject to rig mobilisation and land access agreements.
The company had received approval from Indonesian upstream regulator BPMIGAS for drilling of its Kayumanis1 well in late October.
Kayumanis-1 targets up to 59 million barrels (MMbbl) of oil or 340 billion cubic feet of gas is one of 16 leads identified in the PSC that have combined potential of up to 6 trillion cubic feet of gas and/or 300MMbbl of oil.
The lead is located on the edge of an identified structural high proximate to three significant sub-basins with clear potential for hydrocarbon generation.
Kayumanis-1 targets the Baturaja Limestone and Talang Akar Sandstone Formations, which are the most prolific oil and gas reservoirs in the South Sumatra Basin.
The drill site is on well drained, elevated land adjacent to a paved asphalt road which will facilitate the commencement of drilling and completion.
Based on the results of the Kayumanis-1 Well, two further wells are planned in the initial drilling program. Work is underway on refining the physical drill locations and further details on these will be released closer to spud date.
Sumatra is the sixth largest island in the world and has a well-established oil and gas industry with some 450 oil and gas fields containing reserves of more than 45 billion barrels of oil equivalent.
Any success by Quest will benefit from the extensive infrastructure and multiple hydrocarbon markets located within close proximity to the Ranau PSC.
This includes the nearby South Sumatra " West Java gas pipeline that supplies large markets in Sumatra, West Java and Singapore.
Discovered oil may be commercialised through facilities located within 50 kilometres of the Ranau PSC that process and transport oil from the large, Pertamina-operated, fields to the north of the Ranau PSC.
Ranau contains extensions of proven Sub-basins of the prolific onshore South Sumatra Basin.
These contain several large scale structures within the Ranau PSC which were identified by gravity data during the joint study. Several of these structures have the potential to contain multi-Tcf gas fields.