The Strike Energy Ltd (ASX: STX) share price has plummeted 4.17% today after announcing a $35 million equity raising.
What did Strike Energy announce?
Strike said it has completed a share placement to raise $30 million before costs on the ASX this morning.
The Aussie energy group said it is looking to raise a further $5 million via a Share Purchase Plan (SPP).
The SPP will provide all eligible Strike shareholders on 31 October with the opportunity to participate at the same issue price.
Strike will issue 130,434,783 fully paid ordinary shares at $0.23 per share to institutional and sophisticated investors.
The Placement Price represents a 4.2% discount to the Strike Energy share price, as at close on 29 October.
Following the placement close, the Strike share price fell to the $0.23 level where it sits as at the time of writing.
Why is Strike raising equity?
According to the release, the proceeds will be used to fund a series of projects for the Aussie energy group.
These include the drilling of two appraisal wells at West Erregulla and 3D seismic activities across the Perth Basin.
The continuation of the Jaws Project pilot test at Strike's Southern Cooper Basin Gas Project and general working capital will also attract funding.
How has the Strike share price performed in 2019?
It's been a bumper 2019 for the Strike Energy share price so far.
Strike shares are up 155.56% since the start of January as the company's market cap has rocketed to $362 million.
There are a few key events that have caused Strike shares to surge higher in 2019.
The biggest driver has been the company's West Erregulla updates, which noted a "staggering" conventional gas discovery in August 2019.
However, a big question mark remains around the company's cash flow, given it is currently in an exploration phase.
Today's equity raising provides a funding boost for the group, but it still remains a risky prospect this early on in the commercialisation phase.
