In late June, both Volga Gas and Tethys Petroleum successfully completed offerings that will enable them to further develop their existing assets. Volga Gas raised $27 million through an accelerated bookbuild lead-managed by Oriel Securities and Renaissance Capital, which involved the sale of 27 million shares at $1 apiece.
"Even a couple of months ago it would have been debatable whether financings in less-liquid names could have got done, but now people’s risk tolerance has expanded and they are more open to a broader range of opportunities than before," says John Porter, head of equity capital markets at Renaissance Capital in Moscow. "Overall the mindset is that investors have less fear and no longer think that we’re heading into the abyss."
Tony Alves, chief financial officer at Volga Gas in London, says that the shares were placed with existing investors of the independent oil and gas exploration and production company, which holds four licences for sites in the Volga region of Russia. The proceeds of the offering will be used to fund test drilling on its Karpenskiy licence site in the Saratov region, which is estimated to have potential reserves equivalent to 390 million barrels of oil – more than five times Volga Gas’s existing reserves of 68 million barrels.