The company previously announced on Sep. 2, 2005, a private placement of 10,557,865 shares of common stock at $0.80 per share for gross proceeds of $8.4 million.
"We are very pleased that we have successfully closed this preferred stock offering as well as the oversubscribed private placement financing as we believe it demonstrates the strength and potential of this venture," said Don Cameron, chief executive officer at Sky Petroleum, Inc. "To date we have raised approximately $22 million and we are currently exploring financing opportunities to raise additional capital to complete our funding for the Mubarek project."
The company earlier announced it had received bridge loans totaling $4.15 million, evidenced by demand notes, to fund a portion of the financial commitments of Sky Petroleum's wholly owned subsidiary, Sastaro Limited, pursuant to the Participation Agreement, dated May 18, 2005, between Sastaro and Buttes Gas and Oil Co. International Inc., a wholly owned subsidiary of Crescent Petroleum Company International Limited, through which Sastaro will participate in an offshore oil and gas project in the United Arab Emirates. Holders of $2.95 million of the demand notes converted the principal and interest on the notes into common stock and the remaining notes were fully paid from the proceeds of the common stock private placement. As a result of these transactions the company has no outstanding demand notes.
The alliance with BGOI and Crescent unites Sky Petroleum with one of the United Arab Emirates' most established and successful, integrated low-cost operators with over 30 years of extensive experience in the region. As established operators in the Mubarek oil and gas field for over three decades, BGOI and Crescent bring extensive knowledge of the geological formations and reservoir potential of the Mubarek Field.
Mubarek Development Project
The first commercial oil was produced in the mid 1970s in the Mubarek Field, marking the beginning of over three decades of continuous production. The total estimated cumulative recovery to date exceeds 100 million barrels of oil. Sky Petroleum believes that this represents approximately 30% of the estimated original oil in place (STOIIP) of 275 million barrels and that there are significant additional reserves that may be produced by the new infill well program. The Mubarek Field production facilities have the capacity to process 60,000 barrels of oil per day. The company expects the first phase of a proposed two phase infill drilling program into the Ilam/Mishrif reservoir situated within the Mubarek Field to commence in early 2006.
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