“This capital raising is part of an ongoing capital requirement by Moby, if we are to test our prospects,” the company said.
“We concluded that this was the kind of well that we ought to seek to fully fund ourselves, unless we received a commercially attractive offer to farmin.
“Our strategy is to seek out significantly sized targets, albeit high risk, which is in keeping with the Board’s views that shareholders only invest in a high risk activity company such as Moby because of the quantum nature of the potential returns.
“The drilling of the Maclean prospect represents an appropriate and manageable balance between risk and reward. The continuance of world crude oil and natural gas prices at current levels provides shareholders with a reward for risk taking that is necessary [but] the risks are substantial.”
The prospect has been defined by 2D and 3D seismic and the company said it had chosen to fund the well for several reasons. It believed the prospect could hold sufficient oil so that it could be developed on a stand-alone basis, if drilling was successful.
It could also be drilled using a drilling slot acquired at an attractive rig-rate that had been agreed before the recent significant increase in rig hire rates. And because the target depth of the well was less than 1000 metres, the well was relatively inexpensive by the standards of that part of Bass Strait.
Moby shareholders are being invited to participate in a pro rata rights entitlement issue of 18,060,071 new shares at 12 cents each and 18,060,071 options.
For each new share taken, shareholders would be granted one option, free of cost, exercisable at 20 cents on or before March 31, 2006. Once exercised, this option will give rise to a further option exercisable on or before 30 June 2008 at 30 cents.
The rights are renounceable, enabling eligible shareholders who do not wish to subscribe for their rights an opportunity to sell them.
The offer is fully underwritten by Patersons Securities Limited.
Participants in the Maclean joint venture are Bass Strait Oil Company (operator) 40%, Moby Oil and Gas Limited 35% and Eagle Bay Resources NL 25%.