Australian Oil Raises $800K to Accelerate California Growth Plans

Capital Raising Details

Australian Oil Company Limited (ASX – AOK) has successfully secured firm commitments for a two-tranche capital raising designed to inject $800,000 (before costs) into the company’s operations. The first tranche, completed under the company’s existing placement capacity, involves issuing nearly 191 million shares at $0.0021 each, raising just over $400,000. The second tranche, which requires shareholder approval, will see the issue of approximately 307 million shares at a lower price of $0.0013 per share, raising a similar amount.

Alongside the share placement, participants will receive options exercisable at $0.004 each, expiring two years from issuance. These options, totaling nearly 249 million, are also subject to shareholder approval, adding a layer of conditionality to the full capital raise.

Strategic Use of Funds

The capital raised is earmarked primarily for advancing Australian Oil’s operations in California’s Sacramento Basin, a region where the company holds a portfolio of producing wells and exploration prospects. The funds will support production optimization and maintenance activities, ensuring existing assets perform efficiently. Additionally, the company plans to allocate resources toward evaluating new venture opportunities and conducting due diligence, signaling an appetite for growth and asset acquisition.

General working capital needs will also be met, providing the company with operational flexibility as it navigates the complexities of oil and gas exploration and production.

Market Confidence and Management

The placement attracted strong support from sophisticated and institutional investors, reflecting confidence in Australian Oil’s strategic direction. Sanlam Private Wealth Pty Ltd acted as lead manager, receiving a 6% fee on funds raised plus a corporate management fee. Subject to shareholder approval, Sanlam or its nominees will be granted 40 million options on the same terms as those offered to placement participants, aligning interests between the company and its advisors.

Managing Director Kane Marshall expressed optimism about the capital raising, emphasizing the company’s commitment to progressing its Californian operations and growth initiatives. The successful raise and investor backing provide a solid platform for Australian Oil to execute its strategy in a competitive energy market.

Looking Ahead

While the first tranche is already completed, the second tranche and option issuance await shareholder approval, which introduces some uncertainty regarding the final capital structure and dilution impact. Investors will be keenly watching the upcoming general meeting outcomes and subsequent operational updates to gauge the company’s trajectory.