The Invictus share price just tanked 12%. Here’s why

We check what’s happened to shares in the oil and gas explorer.

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Key points

  • Invictus shares sink 12% to 24.2 cents each
  • The company announced the successful completion of its $12 million private placement
  • A majority of the funds will be used to commence drilling operations at the Mukuyu prospect in July

The Invictus Energy Ltd (ASX: IVZ) share price is having a woeful day following the company’s latest release.

At the time of writing, the oil and gas exploration company’s shares are down 12% to 24.2 cents apiece.

Let’s take a closer look and see what Invictus updated the ASX market with today.

Invictus completes $12 million placement

Investors are scrambling to sell Invictus shares after details of an impending share dilution from the company.

According to its statement, Invictus advised it has received firm commitments to raise $12 million through a private placement. The offer was presented to new and existing sophisticated and institutional investors.

Under the placement, Invictus will issue roughly 60 million fully-paid ordinary shares at an issue price of 20 cents apiece. This represents a 27.3% discount to the last closing price of 24.5 cents on 18 May.

In addition, placement participants will receive a free option on a one-for-two basis, at a strike price of 35 cents. These options will have a one-year expiry date.

The company will seek to have the options listed on ASX and approval for director participation. This will be held at the extraordinary general meeting (EGM) on 30 June.

The proceeds of the placement will be used towards Invictus’ upcoming drilling campaign at the Cabora Bassa Project in Zimbabwe.

The company stated that the first well in the campaign will target the Mukuyu prospect, which has been independently estimated to contain 8.2 trillion cubic feet and 247 million barrels of conventional gas condensate.

Invictus managing director Scott Macmillan commented:

We are pleased to welcome new institutional investors onto our share register at an exciting time for the Company as we prepare to embark on our maiden drilling campaign in Zimbabwe.

Through the completion of this capital raise, in conjunction with our existing cash balance and additional funds delivered via the exercise of in-the-money options, the Company is well funded for the Mukuyu-1 well.

Drilling of the Mukuyu-1 well, which will test Africa’s largest undrilled onshore oil and gas prospect, remains on track to commence in July.

Invictus share price summary

Regardless of today’s decline, the Invictus share price has zipped almost 60% higher in the past 12 months.

Year to date, the company’s shares are up 96%.

Invictus has a market capitalisation of approximately $165 million, with around 674.5 million shares on issue.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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