Karoon Energy Ltd (ASX: KAR) shares remain out of action on Thursday.
The energy company's shares were put in a trading halt yesterday after news leaked that it was planning a major capital raising.
A number of investors were able to sell their shares before they were halted, leading to a 10% decline.
The good news, though, is that this decline doesn't appear to have impacted the price the company is raising the funds at.
According to the announcement, Karoon Energy is raising $480 million via a fully underwritten equity raising at $2.05 per new share. This represents a modest 4.6% discount to where Karoon Energy shares last traded and a 14.6% discount to the price before the news leak.
The company's capital raising comprises a fully underwritten institutional placement of $170 million to new and existing eligible institutional investors, and a fully underwritten 1-for-3.75 accelerated non-renounceable entitlement of $310 million.
Why is it raising funds?
Karoon Energy is raising the funds for a major acquisition.
It has entered into binding arrangements to acquire a 30% interest in the Who Dat and Dome Patrol fields and associated infrastructure, as well as a ~16% interest in the Abilene field from LLOG Exploration Offshore.
In addition, Karoon will acquire various interests in adjacent acreage which contains the Who Dat East (40%), Who Dat West (35%) and Who Dat South (30% interest) exploration and appraisal opportunities.
The total acquisition consideration is US$720 million (A$1,152 million).
The release notes that Who Dat is a high-quality, low-cost, conventional deepwater oil and gas operation located in ~800 metres of water, offshore Louisiana and within federal waters of the US Gulf of Mexico.
The assets are expected to add approximately 4.0 – 4.5 MMboe to Karoon's 2024 production on a net revenue interest (NRI) basis. This would take the company's total proforma 2024 production to 12.0 – 14.5 MMboe.
Post-acquisition, management notes that Karoon will have a diversified production base in two prolific hydrocarbon basins and material near-term organic growth potential.
When are Karoon Energy shares returning?
The company has requested that its shares remain halted until Friday. So, we should see how the market feels about this acquisition tomorrow morning.
