By Staff Reporter
WINDHOEK, Sept. 1 — Global Petroleum saw a decline in its share price on Thursday, following the company’s announcement of a £250,000 ($318,025) discounted placement. The placement price of 0.1 pence per share reflects a 37.5% discount compared to Wednesday’s closing price.
This energy company, listed on AIM, revealed that the funds raised through the placement would be allocated to further technical work at its Walvis Basin license PEL 94 in Namibia, as well as for general working capital requirements. The placement is being managed by Stifel Nicolaus Europe Limited.
The decrease in Global Petroleum’s share price suggests that investors may have doubts about the company’s ability to discover commercially viable quantities of oil or gas at PEL 94. Nevertheless, the company has expressed confidence in the license’s potential and emphasizes that the placement will provide the necessary financial resources to sustain its exploration efforts. The placement is scheduled to conclude around September 8, 2023.
Analyst’s Perspective
In a client advisory, analysts at Stifel Nicolaus described the placement price of 0.1 pence per share as “reasonable” and anticipate that the proceeds will furnish Global Petroleum with “adequate funding to advance its exploration activities at PEL 94.”
The analysts remain “optimistic” about PEL 94’s prospects, believing that the company possesses a “promising likelihood” of discovering commercial oil or gas reserves. However, they also acknowledged that the placement signifies Global Petroleum’s current financial constraints, raising the possibility of future capital-raising endeavours.
Investor Considerations
Investors considering involvement with Global Petroleum should exercise caution and carefully evaluate the associated risks. The company is still in the early stages of exploration, with no guarantees of locating commercial quantities of oil or gas. Furthermore, it is essential to be cognizant of the company’s financial constraints, which might necessitate additional capital raising in the future.
In summary, Global Petroleum’s discounted placement reflects the financial challenges it faces. Nevertheless, the company maintains its confidence in the potential of the Walvis Basin license, supported by the proceeds from the placement. Investors should weigh the risks before considering an investment in Global Petroleum.
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