Brokers welcome Rockhopper fund raising

19th Oct 2010 16:24

Rockhopper, the North Falkland Basin oil and gas exploration company, has completed the placing it announced yesterday.The company raised £206.3m (gross) through the placing of 65.5m shares at 315p each. The new shares represent about 34% of the enlarged share capital of the company.Proceeds from the issue will be used to fund its drilling programme in the North Falkland Basin."Rockhopper's fund raising virtually ensures that activity in the North Falkland Basin will continue through 2011. It will also go a significant way in advancing Sea Lion towards ultimate development, while providing the necessary funds to pursue additional exploration targets, which the upcoming 3D programme will further define," said broker Westhouse Securities, which specialises in the resource sector. "We believe it is also positive that such a large raise was accomplished at such a small discount, particularly in light of last week's resource update. We maintain our BUY recommendation and current price target of 495p," the broker added. Fellow broker Panmure Gordon also welcomed the fund raising. "This should be seen as good news. The company had flagged at the end of last week that it was looking at potential financing in order to secure a further long term contract for the Ocean Guardian. We believe that this has overshadowed the shares," the broker said."This also gives the company more than enough money to carry out an exploration drilling programme which will allow the company to look for similar prospects in the area. These prospects are expected to be matured as the company carries an additional 3D seismic programme which is expected to start in January 2011. With this overhang cleared we would expect to see the shares bounce after the recent underperformance," Panmure Gordon said.