Pilot Energy Raises $1.8M to Fund Cliff Head Carbon Storage Transition
Pilot Energy has locked in a $1.8 million convertible note funding deal led by Discovery Investments, fueling its transition from oil production to carbon storage at the Cliff Head site. The funding hinges on upcoming shareholder approval and replaces a previously stalled arrangement.
- Binding $1.8 million convertible note agreement with Discovery-led syndicate
- $750,000 advanced immediately without conversion rights
- Funding supports transition of Cliff Head facilities to carbon injection and storage
- Shareholder approval required for full note issuance
- Replaces prior funding agreement terminated due to non-payment
Funding Secured Amid Transition Ambitions
Pilot Energy Limited (ASX: PGY) has announced a significant step in its strategic pivot from traditional oil production to clean energy solutions. The company has entered into a binding agreement to raise up to $1.8 million through convertible notes, led by a syndicate headed by Discovery Investments Pty Ltd. This funding is earmarked to support the ongoing transformation of the Cliff Head oil field infrastructure into a carbon injection and storage facility, a cornerstone of its Mid West Clean Energy Project.
Details of the Convertible Note Arrangement
The agreement stipulates an initial advance of $750,000 to Pilot Energy without conversion rights, with the remaining $1.05 million to be issued as convertible notes upon shareholder approval. This approval is expected at a general meeting scheduled for early June 2025. The notes carry a 12% compounding interest rate, payable quarterly, and offer conversion options into shares or a royalty interest in the carbon storage project after an initial six-month lock-up period.
Replacing a Stalled Funding Deal
This new funding arrangement replaces a previous convertible note facility with 1Stock Limited, which failed to deliver the committed funds. The company terminated that agreement and swiftly secured this new syndicate-led deal, maintaining continuity in its capital raising efforts. The terms mirror those of the prior agreement, reflecting Pilot Energy's consistent approach to financing its energy transition projects.
Strategic Implications for Pilot Energy
With a 21.25% stake in the Cliff Head Oil field and plans to acquire full ownership, Pilot Energy is positioning itself at the forefront of Australia's offshore carbon storage initiatives. The funding will directly support the conversion of existing oil production facilities into carbon storage infrastructure, aligning with broader industry trends toward decarbonization and clean energy development. The involvement of experienced energy investor Greg Columbus adds further credibility to the syndicate backing the deal.
Looking Ahead
While the convertible notes offer flexibility in repayment and conversion, the final impact on Pilot Energy's capital structure will depend on shareholder approval and investor conversion decisions. The company’s ability to execute its carbon storage transition effectively will be critical in unlocking value and attracting further investment in the evolving clean energy landscape.
Bottom Line?
Pilot Energy’s new funding deal marks a pivotal moment in its clean energy transition, but shareholder approval and execution remain key hurdles.
Questions in the middle?
- Will shareholders approve the full issuance of convertible notes at the upcoming meeting?
- How might conversion of notes into shares or royalties affect Pilot Energy’s future equity and control?
- What are the timelines and milestones for the Cliff Head Carbon Storage Project’s operational transition?
