TomCo raises £0.93m, teams up with Valkor

Oil shale exploration, development and technology company TomCo Energy has raised £0.925m gross through a placing of 142,307,692 new ordinary shares at a price of 0.65peach, it announced on Wednesday, through its broker, Turner Pope Investments.

The AIM-traded firm said the number of placing shares to be issued represented about 107% of its current issued share capital.

It added that every two placing shares had one warrant attached, with each warrant having the right to acquire one new ordinary share at an exercise price of 1.5p for a period of two years from the date of admission.

The company said it intended to use the net proceeds of the placing to undertake a proposed resources report and engineering study for a potential oil and tar sands opportunity, and to complete the design revisions of the TurboShale system as well as for general working capital.

“While the company's focus has been on advancing TurboShale's RF technology, the company has also continued to explore other opportunities for the group’s oil shale leases within the Uintah Basin [in] Utah,” the board said in its statement.

“The company is therefore pleased to announce that it has entered into a non-binding memorandum of understanding with Valkor, pursuant to which the company and Valkor will explore the oil [and] tar sands potential across the leases.”

TomCo described Valkor as an international engineering, procurement, construction and installation, and field operations company, with operations in the United States, South America and Africa, both on and offshore, and the owner and operator of gas and oil fields in Trinidad, the US, Turkey and Ukraine.

Through its subsidiary, Valkor Energy Services, it had assisted with the design improvements of Petroteq Energy#s closed loop system for use in the recovery of oil from oil sands over the last 18 months, which it said would bring “valuable experience and knowledge” to TomCo in looking at the oil/tar sand opportunity across its leases.

It said oil and tar sands were present on several of the leases and, as they tended to be present around the surface, the board believed they should be suitable for surface mining,, subject to completion of the applicable studies and analysis.

Unlike oil shale, which requires a heating process to convert the kerogen in the shale into oil, the sands already contained oil and so only required a separation process to separate it from the sand.

Under the memorandum of understanding, the parties would seek to agree the scope of a study, to be undertaken by a “suitably qualified” third party and managed by Valkor, on at least one of the leases, to determine the location of any oil and tar sands, the potential quantum available to be recovered, and a plan for the mining and processing of any such sands.

Subject to the findings of the study, Valkor shall would undertake an engineering study to determine the location for a proposed facility, preliminary plant design and economic analysis for the development of a 3,000 barrels of oil per day system from the sands on the group's leases.

In addition, under the memorandum, the parties would explore the potential for the use of TurboShale's RF technology in an oil sands field operated by Valkor in Trinidad.

Looking at its turboShale operations, TomCo said that following its announcement on 3 October, it could confirm that Continental Electronics had completed its analysis of the antenna, resulting in it recommending a number of modifications to the setup of the antenna.

Those would be incorporated into a revised design of the wellhead, for which the company would be engaging a third-party engineering company.

The revised wellhead would allow for a more efficient connection of the RF transmission line from the transmitters to the antenna, an integration of the nitrogen supply into the well via the antenna to ensure its accurate delivery down the well, and a separation of the hydrocarbon recovery system from the antenna, the board said.

“The introduction to Valkor provides a number of exciting opportunities to the group,” said chief executive officer John Potter.

“Valkor's experience in the oil/tar sands space, given their work and relationship with Petroteq, provides TomCo with another avenue to potentially unlock the value of its leases.

“I am looking forward to working with Steve Byle and the Valkor team as we develop our working relationship.”

At 1603 GMT, shares in TomCo Energy had plunged 40.92% to 0.64p.