It intends to raise a further £770,000 through an additional share sale to other qualifying shareholders.
As part of the fundraising process, the company proposes to reorganize its capital, by consolidating the number of shares in issue (on a 100:1 basis). Accordingly, the company intends to issue new shares at a price of 10p each (Monday’s closing price was 0.44p).
"The proposals outlined today deliver the short-term capital required to safeguard Cabot Energy's future,” said James Dewar, Cabot’s interim non-executive chairman.
“It follows a forensic assessment of the company's financial position and consideration of all available options, including asset sales, and what is being recommended by the Board we believe is in the best interest of all shareholders.
“The funds will enable the company to deliver on its creditor settlement agreements and provide a platform for the growth financing plan by the end of Q1 2019.”
Chief executive Scott Aitken added: “This Fundraising will facilitate the partial settlement of amounts owed to the Group's creditors, predominantly trade creditors of Cabot Canada, following cost overruns of the Canadian work programme early in 2018, before the new executive team took over.
“We continue to engage in constructive discussions with our creditors and would like to thank them for their continued support as we secured discounts and rescheduling of payments due.”
"Looking ahead, the directors believe that the underlying assets of the business remain strong.
“As previously stated, we were encouraged by the annual increase of 26% in gross Net Proven plus Probable reserves to 3.6mln barrels oil equivalent as well as the 339% increase in gross reserves and resources of the Canadian asset to 42.2mln boe.”
The fundraising and the proposed capital reorganisation require shareholder approval and a general meeting is slated for March 1 in London.