SINGAPORE (Dec 15): Interra Resources is placing out 79.5 million shares at 5.9 cents per share to China ZhenHua Oil’s wholly-owned subsidiary, North Petroleum International, for approximately $4.7 million.  

The placement is expected to raise approximately US$3.47 million ($4.68 million) in net proceeds.

Upon completion of the transaction, China’s state-owned Zhenhua Oil will become the second-largest shareholder of Interra Resources with a 13.6% stake of the enlarged share capital in the group.

In a Friday announcement, Interra Resources says it believes the move will strengthen its existing partnership with ZhenHua Oil for opportunities in Myanmar’s oil and gas (O&G) industry, allowing both companies to further explore a collaborative partnership in the region.

Interra Resources and ZhenHua Oil have a respective 60%-40% stake in Goldpetrol Joint Operating Company, which operates the Chauk and Yenangyaung fields in Myanmar.

The deal follows Interra Resources’ August announcement of its 11-year contract extension from Myanma Oil & Gas Enterprise, which the group says will enable the company, which has been operating in Myanmar since the 1990s, to enhance the development of its fields in Myanmar.

Interra Resources largely attributes its 99% rise in its shareable production in 3Q17 to 54,197 barrels to the resumption of work programs after signing of the contract extension in 2Q, during which the drilling program resumed.

Marcel Tjia, CEO of Interra Resources, says the group’s latest share placement deal will escalate its relationship with ZhenHua Oil to a significantly higher level.

“Interra Resources believes that this alliance will benefit Myanmar from the onset as the country’s energy requirements continue to grow. We believe the fundamentals of our relationship are very strong and it is an opportune time to undertake more work in emerging Myanmar as well as regionally,” says Tjia.

Adds Lin Yifeng, ZhenHua Oil’s vice president: “ZhenHua Oil believes that the Chauk and Yenangyaung oil fields have great production potential, and with effort and hard work from both partners, will bring new life to these 100-year old oil fields. ZhenHua Oil has a very close working relationship with Interra, and we believe both parties will have more opportunities for cooperation in the future.”

As at 3.31pm, shares in Interra Resources are trading 5% higher at 6.3 cents.