A subsidiary of Magnus Energy is forking out A$1 million (S$1 million) in cash to subscribe for 8 million shares in a new Australian oil and gas company.
The unlisted firm, Royal, was incorporated in June, and seeks to hold equity stakes in developed or assets nearing production, utilising the expertise of its "highly experienced" management team, Magnus Energy said in the announcement.
Royal is currently in the process of raising funds for its acquisition and participation plans, and intends to raise between A$5 million and A$10 million. It will issue between 45.75 million and 70.75 million shares, respectively, with its capital structure to be finalised on or around Sept 30.
Magnus Energy, through its 55.89 per cent stake in Mid-Continent Equipment Group (Mid-Con), will hold a maximum equity stake of about 17.5 per cent in Royal. Mid-Con will fund the transaction with its existing cash reserves.
"The proposed subscription would enable Mid-Con to take a strategic stake in Royal to expand its oil and gas equipment supply business and to participate in the oil and gas investment opportunities through Royal," Magnus Energy said in its exchange filing.
According to the filing, Royal has assessed a number of opportunities for its portfolio, and plans to acquire a 30-40 per cent stake in an oilfield located on North Island Taranaki in New Zealand.