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.