Australian oil and gas producer, Mosaic Oil N.L. has successfully raised $10.9 million by way of a placement of 94.74 million shares at 11.5 cents.

The placement, which was managed by RBS Morgans, was heavily oversubscribed from a range of sophisticated and institutional investors.

The company is also pleased to announce a Share Purchase Plan (SPP) for existing Mosaic Oil shareholders at the same price, representing a discount of approximately 17% to the Mosaic Oil share price at the close of trading on 30 September 2009. Shareholders owning Mosaic Oil shares as at 7th October 2009 will be entitled to purchase up to a maximum of $15,000 shares as part of the SPP, details of which will be set out in more detail for shareholders shortly.

Mosaic Oil Chairman Mr David Herlihy said that “the immediate and positive response from sophisticated and institutional investors is extremely encouraging. It is important to the board that all shareholders are given an opportunity to participate on the same terms as the placement”.

Directors of the company have also subscribed to participate in a Placement on similar terms. The Directors participation is subject to shareholder approval which will be considered at the company’s Annual General Meeting on 24 November 2009.

The funds raised through the placement and the SPP will be used to finance Mosaic Oil’s exploration and development plans with a particular emphasis on drilling new oil wells to maximise liquid hydrocarbon production rates.

The company will also fund acquisition of additional seismic over exploration prospects and over the recently acquired Churchie asset. Funds will also be used to invest in progressing Mosaic Oil’s underground gas storage opportunity in Queensland.

Alex Parks CEO of Mosaic commented on the raising saying “There is clearly market support for our strategy to increase activity and commercialise our substantial reserves in Queensland. This Placement and the SPP gives Mosaic a strong balance sheet to fund ongoing organic growth through the drill bit.”

Tags: Mosaic Oil NL