AMERICAN Patriot Oil and Gas has joined the Australian Securities Exchange after the company raised more than $8 million in a successful initial public offering.
American Patriot listed on 9 July with 144.2 million shares on issue and a market capitalisation of $28 million based on the 20c a share offer price but closed the trading day slightly below its issue price of 17c.
The IPO, which was managed by Peloton Capital, was backed by institutional and high net worth investors in Australia who took a liking to the company’s portfolio of assets in the Rocky Mountain basins of the USA and also the business model which is focused on early entry into oil fields and establishing joint ventures to fund exploration across its portfolio.
The company, which is headquartered in Melbourne with an office in Denver, Colorado, will use the funds from the IPO to develop its portfolio of assets via an extensive program of lease acquisition.
American Patriot has about 56,000 gross acres under lease across five key projects geographically focused on tight oil exploration and development opportunities in the Rocky Mountain basins in or nearby old conventional oil fields with significant amounts of infrastructure.
The company’s strategy is to internally generate prospects using geological knowledge, capture significant land positions at a low cost, and then reduce or remove risk capital exposure through farm-out of a majority interest to a US operator in a cash and carry deal.
American Patriot said it was focused on efficient use of shareholder funds and would always look to partner with another operator to minimise use of investor capital.
This business model has proven to be successful with other ASX listed companies with assets in the US.
The company has already completed its first joint venture agreement on its key Northern Star asset in Montana for cash upfront on the land and two well horizontal well free carry deal with an option for two more wells – a spend of up to $24 million on the acreage with no cost caps.
Its chosen partner, Treasure Exploration, who is operator, is part of a successful US-based private oil and gas company.
American Patriot chief executive Alexis Clark said the successful IPO highlighted the degree of confidence investors had in its projects.
“With exploration costs for American Patriot covered by our partners under our joint venture business model, the funds raised in the IPO are targeted for additional acreage acquisitions” he said.
“Drilling on our key Northern Star project commences in the next few months with American Patriot free carried on the horizontal well by Treasure Exploration with no cost cap.
“Success on this project should unlock a significant new tight oil resource project with significant upside to the acreage value from American Patriots low cost entry point.”