This morning New Guinea Energy (NGE) debuted on the ASX at a 32% discount to its initial offer price following a $17.3 million float.
The Sydney-based oil and gas explorer and producer had offered 80 million shares at 25 cents each in its initial public offer (IPO), but its shares began trading at 17 cents and soon fell even lower to 16 cents.
The company has six exploration tenements covering over 52,000 square kilometres onshore of the Papuan basin in Papua New Guinea.
Since it was formed in 2005, NGE has invested over $20 million in acquiring one of the most comprehensive oil and has databases in Papua New Guinea.
NGE said that it has fulfilled its initial goal to acquire a core licence portfolio and develop an exploration holding in the basin.
"During this time the oil price has increased from $US45 a barrel to $US100 a barrel and as we enter 2008 remains above $US91," NGE said in a statement.
"The economic potential of NGE's assets has therefore been very significantly enhanced."
Managining Director of NGE Jeremy Towner said: "this capital raising moves NGE field operations in PNG to the next stage to have the appraisal and exploration acreage portfolio tested with well drilling,"
"Areas adjacent to NGE's licences in that basin already have discoveries of over 1 billion barrels of oil and 15 trillion cubic feet (TCF) of gas."
Mr Towner said NGE's technical team has mapped six drillable prospects and 53 leads with an average size of over 60 million barrels of oil equivalent (mmboe) of in-place petroleum resource potential.
"So we have a long future for exploration and potential discovery and development ahead of us," he said.
Broker and lead manager of the IPO Barry Dawes said NGE's issue price of 25 cents offered a good entry price considering the extensive potential of the Papua New Guinea licences – a statement the market seems to disagree with.
"A discovery in any one of the licences would create a significant upward re-rating," Mr Dawes said.
At 11:50PM AEST, NGE shares were still down by 8 cents at the morning's low of 16 cents.