Mosman Oil and Gas Limited (LON:MSMN) said it has decided to narrow its focus and prioritise the Stanley project and similar assets in Texas.
The AIM-quoted oil junior also announced plans to raise £300,000 of new funds through a share placing to support this revised strategy. The placing price wlll be at 0.15p per share, with investors also receiving one warrant to subscribe for further new ordinary shares at an exercise price of 0.23p with a term of 12 months.
The group also revealed that, in due course, it will seek to exit and sell its interests in the Welch and Arkoma projects.
At Stanley, Mosman said it is anticipated that periodic well workovers and recompletions can increase production and cash-flow from existing wells.
New drilling is expected to start in February, with the Stanley-4 well, followed by the Stanley-5 well in the second quarter. Meanwhile, preparations are also being made for drilling at the Falcon and Galaxie projects, which are slated for the second half of 2020.
The group noted that production continues from the three existing Stanley wells - and, that in each, there are multiple zones which will be produced from sequentially, until each is depleted, starting with the deepest.
The company said that the current producing zone is therefore not necessarily the zone with the highest production rate, adding that new wells can accelerate the rate of production.
Stanley-3 has been producing steadily at 170 barrels of oil per day since coming online in September, Mosman said, and the Stanley-1 and Stanley-2 have experienced variable rates amid periodic workovers. The group’s net production attributable to Mosman amounted to 13,253 barrels oil equivalent for the six months ended 31 December 2019.
Mosman intends to retain its interests in the EP 145 exploration area in Australia, and if it continues to progress permitting efforts.
"The great success at Stanley has enabled us to clearly define our focus as we build our production and development projects,” said John Barr, Mosman chairman.
“We are now identifying further opportunities with a more streamlined focus and are implementing a funding plan in order to progress. We are pleased to have reached this stage in our growth plan and look forward to delivering accelerated growth in production in 2020."
The group also said company directors John Barr and Andy Carroll have agreed to subscribe for new Mosman shares, on the same terms as the placing. Together they will take up 41.6mln new shares. They will subsequently hold 4.52% and 3.79% of the company respectively.