British Borneo to raise pounds 167m from shareholders

British Borneo Petroleum Syndicate yesterday launched a pounds 167m rights issue on the back of its ballooning share price, which has multiplied more than five times over the past 18 months.

Shares in the oil group, which were around 810p at the start of the year, dipped 50p to pounds 13.62 yesterday. However, they remain above the terms of the fully underwritten two-for-nine rights, which are priced at pounds 12 a share.

The new money will arrive some 18 months after British Borneo raised pounds 54m in a rights call at just 310p in early 1996. It will be used to back a pounds 500m exploration and development programme, principally in the North Sea and the deeper waters of the Gulf of Mexico, where it also announced yesterday a deal to buy a half share in the King Kong gas field from Conoco.

No price was disclosed for the transaction, which involves blocks 472, 473 and 517 in the Green Canyon area, where British Borneo had an exploration setback earlier this year when it announced that oil deposits there were too heavy to produce commercially.

Alan Gaynor, chief executive, said: "The ambition to grow in the deep water is very large. We feel we have a 10-year growth opportunity there."

At a meeting with analysts yesterday, the company put an estimate of pounds 20 a share on its assets, more than double the 800p to 900p ascribed to them in the City.

While remaining highly supportive of the management, many analysts remained sceptical about the timing of the latest cash raising. One said: "You would have to be a fool not to believe it was opportunistic. Certainly it is a very heavy rights issue at a very demanding price."

Principal among British Borneo's development projects is the Morpeth oil and gas field, acquired from Shell in late 1995. It is to be developed using the innovative SeaStar mini-tension leg platform, which allows relatively small fields to be developed commercially. The overall cost of the development is put at $217m (pounds 129m), with first oil and gas due in the autumn of next year.

The group said total capital expenditure this year was likely to be in the region of pounds 175m to pounds 200m, with a further pounds 300m up to 2000.

The group said it would explore and appraise existing assets in the Gulf, including Shell's Leo discovery and King Kong, where Shell has the option to become operator.

It also intends to acquire additional exploration acreage in water depths up to 4,000 feet, where it may deploy two deep water drilling rigs, Ocean Endeavour and Atwood Hunter, over which it has contracts for one and three years respectively.

The company also announced plans for an effective three-for-one stock split and forecast full-year dividends of 8.25p, the same as in 1996.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future