The Petro Matad Limited (LON: MATD) share price crashed 37.3% after it raised gross proceeds of US$6.0 million at a discounted price of 2.50p. Investors reacted negatively to the news, given that the participating shareholders were offered a lower price than yesterday’s closing share price of 4.10p.
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The petroleum exploration, development and production company with operations in Mongolia issued 195,121,952 new ordinary shares priced at 2.50p each. A company director and another significant shareholder participated in the capital rise showing their commitment to the firm and their confidence in its prospects.
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Petrovis Matad Inc. (a Substantial Shareholder) participated in the Subscription for a total of 32,520,324 Subscription Shares valued at US$1.0 million. Mike Buck, Petro Matad’s CEO, also participated in the Subscription by buying 813,008 Subscription Shares valued at US$25,000.
The new shares issued will now represent 17.8% of the company’s enlarged share capital,w which shows the significance of the capital raise. The firm also launched a retail offer of up to 20 million new ordinary shares to be sold via the BookBuild platform at 2.50p each to raise an additional £500,000 (US$615,000).
The retail offer will give Petro Matad’s retail investors in the United Kingdom an opportunity to participate in the latest capital raise. The company intends to release the results of the retail offer next week on 8 February 2023. It remains to be seen whether there is demand for the company’s shares among retail investors.
Petro Matad is Mongolia's leading oil explorer and has some projects on the cusp of starting production. The company’s Heron 1 well is about to come onstream as soon as the government resolves the ongoing land issues. The company has sourced pumping and power generation equipment already in the country and has completed the downhole drilling.
The oil firm is currently in discussions with DQE Drilling Mongolia’s leading drilling services provider and is about to sign a contract to drill multiple wells. Petro Matad has a lot going for it, which explains why it could quickly raise US$6 million.
*This is not investment advice.
The Petro Matad (MATD) share price chart.
The Petro Matad share price crashed 37.32% to trade at 2.57p, from Thursday’s closing price of 4.10p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.