The Canadian Overseas Petroleum Limited (LON: COPL) share price fell 4.2% after announcing that it had completed the capital raise first announced on 6 October 2023. The company raised US$4 million by selling shares price at 2.6p each.
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The drop in COPL’s share price is part of a larger decline that started in early September and has persisted. However, COPl shares are finally approaching a significant support zone where we could expect a bounce and a move higher. Still, there are no guarantees that the support level will trigger an uptrend.
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The decline in COPL’s share price cannot be entirely attributed to the latest capital raise, given how long the downtrend has been in place. The company priced the new shares at 2.6p each, representing a premium to COPL’s current trading price.
The financing deal announced by COPL on 6 October 2023 included the release of over $13.5 million as free cash flow for COPL America through restructuring senior debt and hedges. The company also reduced its 2023 and 2024 liabilities through the financing.
COPL restructured its hedging activities, crystallising a loss of $10.96 million, which is repayable upon maturity in March 2025 after restructuring its crude and butane swaps with the ‘Swap Provider’.
The oil and gas company also negotiated a waiver from its Swap Provider and ‘Senior Lender’ on interest payments from October to the end of January 2024, saving up to $3.5 million.
The infusion of additional equity financing and the comprehensive restructuring of debt and hedge positions have bolstered COPL’s corporate group, securing over $17 million in investment support from its primary financial backers.
John Cowan, COPL’s CEO, said: “I am delighted to have closed this financing that now allows my entire focus to be on delivering increased production at field site through increasing Q4 NGL injectant. If we can bring production back above 2,000 bbl/d on average for 2024 it will allow us to fully fund COPLA for the entire year. We remain focused on progressing our discussions relating to the JV and look forward to being able to focus on delivering operationally.”
COPL share price.
The COPL share price fell 4.20% to trade at 1.92, from Thursday’s closing price of 2.00p.
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