Investors back Pilot’s CCS ambitions to the tune of $2.2m

Investors have demonstrated their support for Pilot Energy and its Mid West Clean Energy Project by committing to a $2.2m placement priced at 1.7c per share.

New and existing sophisticated, institutional and professional investors will subscribe for more than 129.4 million shares under the placement, which includes one new call option for every two shares subscribed.

Proceeds from the placement will be used by Pilot Energy (ASX:PGY) to complete critical milestones in the development of the project.

Over the next 12 months Pilot plans to complete the necessary works required to enable a final investment decision on the Cliff Head carbon capture and storage project.

Chairman Brad Lingo said the company had completed feasibility studies over the last 12 months that demonstrate the attractiveness of the Mid West Clean Energy Project.

“Following the placement, we now have the runway over the next 12 months to focus on the Cliff Head CCS component of our project, with the objective of getting this to final investment decision (FID) within that time frame.”

It follows on the company reaching a memorandum of understanding late last month for US-based 8 Rivers Capital to invest about $1m in the Mid West Clean Energy project.

“The Pilot team are looking forward to continuing our strong working relationship with 8 Rivers,” Lingo added.

“Pilot’s feasibility studies demonstrated the benefit of combining the Cliff Head CCS resources with the 8 Rivers clean hydrogen solution at our Mid West Clean Energy Project.

“Given 8 Rivers’ market-leading expertise in zero carbon solutions, the investment contemplated by the MOU represents a strong endorsement of Pilot’s Mid West Clean Energy Project.”

Placement

The placement price of 1.7c represents a 15% discount to the five-day volume weighted average price.

Most of the placement – 98 million shares to raise $1.67m – will be issued under the company’s existing capacity while the remaining amount and the options issue will be subject to shareholder approval.

Shareholder approval will also be required for the director’s participation in the placement, which will consist of the acquisition of 2 million shares worth $34,000.

Cliff Head CCS project

Studies have indicated that the Cliff Head CCS project could deliver a gross project real pre-tax net present value (NPV) of between $110-$210m at an internal rate of return of about 30-40%.

This will be achieved by safely and permanently providing up to 16 million tonnes of CO2 storage at a CO2 injection rate of up to 1.1 million tonnes each year.

It will leverage the region’s existing underground CO2 storage capacity, natural gas, and infrastructure already in place at the Cliff Head oil project

Stage 2 of the broader Mid West Clean Energy project will see the addition of the blue hydrogen production component, while stage 3 will expand the project with green and blue hydrogen used to produce ammonia.

8 Rivers will receive an option to offtake 172,500 tonnes per annum of ammonia once the third stage is in production.

This article was developed in collaboration with Pilot Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.