bit of press in todays australian..., page-36

from mergermarket

1. (mm)Hawkley Oil & Gas could consider stake sale as funding option, new MD says


Hawkley Oil & Gas, a listed Australian oil and gas company, could consider a stake sale, new Managing Director and Chief Executive Michael Earle said. A long-term strategic investor was one of several funding options the company has under review, he added.

The AUD 62m (USD 68m) market cap company is "alert to possibilities that broaden its range of financial instruments beyond always having to go to the markets for funding", Earle said. Avoiding shareholder dilution is a key motivation, he added. Apart from a stake sale, debt funding is another option under review. The company would consider approaches from advisers with ideas. Its auditors are Ernst and Young.

An ideal strategic partner for Hawkley, which operates solely in the Ukraine, would potentially be a company that brings "synergistic skills as well as funding", Earle said. These skills could be international oil and gas industry experience that complements Hawkley?s local expertise in the Ukraine, he said. Potential investors with "good connections" to key capital markets such as Australia, the UK or Canada would also be considered.

No decisions have yet been made by the Western Australia-headquartered company on whether it would potentially consider a stake sale to ?one strategic investor or several smaller ones?, Earle said. There is no intention to cede control of the company or to sell it in the immediate future. The growth strategy is focused on releasing value from its existing assets, the Sorochynska and Chernetska licences in the Ukraine.

In the Ukraine, its peer group includes five or six western companies, some of which have been operating there for up to ten years. These include JKX, Regal Petroleum, and Cadogan Petroleum, all from the UK. Cadogan recently brought in the Italian giant ENI as a strategic investor to leverage growth in Ukraine, a development that Hawkley would be ?watching with interest?, Earle said. There are also eight or nine oil and gas companies operating in Western Australia, some of which operate abroad, although none in the Ukraine.

Hawkley has sufficient funding for its strategy ?well into 2012?, Earle said. It raised AUD 13m in April this year and generates about AUD 3m a month in gross revenues from the sale of gas and condensate from the Sorochynska field. As at 31 June 2010, it had AUD13m cash-at-bank. It has no gearing.

The company - which debuted on the ASX in June last year - has more than 2,000 shareholders, mainly Australian retail but also some institutions with small stakes. Founder and Chairman Paul Morgan and Richard Reavley - Earle?s predecessor as MD - are two of the largest stakeholders.