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Point Loma Resources gets $4mln injection from investor Evenergy

Last updated: 16:01 24 May 2017 EDT, First published: 08:07 24 May 2017 EDT

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Point Loma is currently producing around 700 barrels of oil equivalent per day..

Oil producer Point Loma Resources (CVE:PLX) has raised just over $4mln with a strategic investment from Evenergy Company to accelerate growth plans.

Evenergy - a subsidiary of huge Chinese oil firm Zhongcheng Group- will buy 8.375mln shares in Point Loma at 48 cents a share for $4.02mln, it revealed. Shares are currently changing hands at 48.5 cents.

The funds will be used to accelerate previously announced drilling and construction plans.

"Point Loma is excited to add to our capital programs in 2017 with this injection of capital at a key time in our growth cycle," said Terry Meek, president and chief executive.

"Evenergy is an organization seeking further investment opportunities with Point Loma that, in conjunction with Salt Bush Energy, will allow for strong access to capital in this challenging energy market we face today.

"With this combination of capital sources, Point Loma can look to strong growth in 2017 and beyond."

Point Loma is currently producing around 700 barrels of oil equivalent per day (postclosing of the Salt Bush joint venture).

The company expects to accelerate its development plan and increase production with the deployment of the proceeds through certain identified acquisitions, reactivations, development drilling and new pool drilling opportunities, it said.

The investment is expected to close in two tranches, with the first on May 29 to the tune of around $1.79mln.

Evenergy will have the right to nominate one director to the Point Loma board and take part in future equity issuances.

Yesterday, Point Loma announced the closing of the  joint venture funding deal with Transerv Energy's subsidiary Salt Bush.

PLX sold a 20% working interest (WI) in its Alberta assets for $5mln and formed a joint venture to boost crude output and help it seek new opportunities.

An initial capital budget of $5 million through the third quarter of 2017 will be allocated to the drilling of development wells and to build facilities to optimise field operating and activate additional production and target area acquisitions.

Broker Mackie says Evenergy has deep pockets and is a long term strategic investor, which targets quality oil and gas assets.

It is a subsidiary of Zhongcheng Group -  one of the largest independent petroleum refinery, oil products and LPG distribution and retail companies in China.

Mackie says PLX is highly undervalued and trading far below its peer group,  investors today can buy in at a very attractive price with an active drill program to come for the remainder of 2017.

With around 110 million barrels of original oil in place,  it also noted the firm's West Cove Nordegg field has the potential to add substantial reserves and could be a company maker in its own right.

Shares eased 1.03% to $0.48.

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