AAOG – Placing to raise £6.0 million

Anglo African Oil & Gas plc (AIM: AAOG), an independent oil and gas developer, announces that it has raised gross proceeds of £6.0 million through a placing of 60,000,000 new ordinary shares of 5 pence each in the capital of the Company (“Ordinary Shares”) at a price of 10 pence per Ordinary Share (the “Issue Price”) (the “Placing”).  The Placing will provide the Company with the funds required to complete the drilling of well TLP-103C at its Tilapia field in the Republic of the Congo and to conduct due diligence over potential acquisition opportunities.

Summary of the Placing:

·    The Placing is to raise gross proceeds of £6.0 million at a price of 10 pence per new Ordinary Share

·    The Placing uses the Company’s existing authorities to issue the new Ordinary Shares

·    The Placing is subject to the terms and conditions set out in the appendix (the “Appendix”) to this announcement (which forms part of this announcement, such announcement and the Appendix together being, this “Announcement”). The Placing is not underwritten.

·    Application will be made for the new Ordinary Shares to be admitted to trading on AIM (“Admission”).  It is expected that that Admission will become effective at 8.00 a.m. on 15 January 2019 and that dealings in the Ordinary Shares will commence at that time.

Recent Company developments:

·    TLP-101 brought back into production and has now produced an average of 55 bopd during a two-week test period which is materially more than those rates at which the well has produced over recent years.  The Company is evaluating a proposal to use well TLP-102 as a water injector for well TLP-101 which could increase production to as much as 400 bopd.

·    TLP-103C intersected the R1, R2 and R3 horizons on 15 December 2018

Hydrocarbons were encountered in all horizons as prognosed and in line with the Company’s geological model

R1 was intersected at 1,273.3mMD and formed of claystone and siltstone

R2 was intersected at 1,283mMD and was formed of sandstone

R3 was intersected at 1,303mMD and was formed of claystone, dolomite and siltstone

·    TLP-103C intersected the Mengo horizon on 24 December 2018

Hydrocarbons were encountered

The top of the Mengo was picked at 1,856-mMD and formed of interbedded sandstones and claystones, in line with the Company’s geological model

Observed oil and gas shows throughout the entire 50 metres of sandstone beds encountered

·    Schlumberger wireline logging confirmed an aggregate of 44 metres of oil columns across multiple horizons

26 metre oil column in the Mengo identified in sandstones interbedded with claystones between 1,874.8mMD and 1,900.8mMD

An aggregate 13 metres of oil columns across the new horizons identified between the R3 and the Mengo horizons in three layers of sandstones between 1,473mMD and 1,685.5mMD

Five metre oil column identified in the R2 reservoir between 1,282.7mMD and 1,287.7mMD in line with the TLP-101V well located in fine sandstones

Modular formation dynamics tests showed that the R2 reservoir is not depleted, confirming an onshore hydrocarbon system underlying the Tilapia licence area

All three discoveries are of Early Cretaceous (Barremian) age

Schlumberger wireline logging was completed in the entire 12¼” section of the well and further confirmed by a petro-physical interpretation (CPI)

·    Following wireline logging, the Company will continue drilling towards the deeper Djeno horizon, which is known to be a prolific producer in neighbouring fields

Reasons for the Placing and use of proceeds:

The Company will use the net proceeds of the Placing as follows:

Complete well TLP-103C (including contingency)        

£4.25 million

Outstanding and anticipated operational costs

£0.90 million

Due diligence over potential acquisition opportunities

£0.35 million


£5.50 million

David Sefton, Executive Chairman of AAOG, said:

“The money raised in this Placing enables us to complete the TLP-103C well, the results from which so far have hopefully repaid shareholders’ confidence in the Company.  We are therefore very grateful for the continued support of our long-term shareholders who have made this Placing possible.  We are particularly grateful that they have moved so quickly to finance the Company against the backdrop of such market turbulence.

“We remain extremely excited about the potential for TLP-103C. The confirmation of oil in multiple reservoirs, and with greater aggregate oil columns than expected, should with positive results from further testing, enable the Company quickly to effect a material increase in production and cashflows.  However, we are currently drilling towards the Djeno and a success there could prove even more significant than the excellent results achieved so far in the R2 and the Mengo.  We hope to be in a position to announce initial results on the Djeno before the end of this month.

“We should also make clear that this Placing replaces the capital that was available to the Company under the Sandabel Capital L.P. (“Sandabel”) facility that has now been cancelled.  There are no outstanding loan notes due to Sandabel, or any other lender, and the loan notes that were issued to Sandabel were all converted into Ordinary Shares last year.

“This Placing therefore marks a line in the sand for the funding of the TLP-103C well and we look forward to providing further updates on its progress in due course.”

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