Innamincka Seeks Funds to Bring Flax Onstream

Further to recent announcements, with the various Joint Venture positions now resolved, Innamincka Petroleum has completed its planning in respect of its work program for the 2007/08 year which is primarily focused on the company's aiming to bring the Flax Oil Field into commercial production.

To fund this work program Innamincka Petroleum Limited ("INP" or "the Company") is pleased to announce that it has resolved to carry out a Capital Raising Program ("the Program") to raise up to $15 million.

The funds raised from the Program will enable the Company to work toward its immediate goal of bringing the Flax Oil Field into production. Additional objectives include drilling the saddle between the Flax and Juniper Oil Fields and to initiate exploration of ATP 543P South with new joint venturer Santos Limited.

The Program

The Program will be divided into two tranches being a shareholder Share Purchase Plan ("SPP") and an offering under a transaction specific prospectus ("Prospectus Offer") targeted to be lodged in the third week of March 2007.

The SPP will seek to raise up to a maximum of $5 million and will invite those existing shareholders at the Record Date to subscribe for up to a maximum of $5,000 worth of INP shares at an Issue Price being:

  • not less than 80% of the volume weighted average market price of the Company's ordinary shares, calculated over the last 5 days on which sales occurred immediately prior to the issue of the securities. The price so determined will not be greater than $0.25 per ordinary share.

The Prospectus Offer will offer the full amount of the Program being $15 million, enabling any shortfall from the SPP to be raised under the Prospectus (the ultimate number of shares allotted under the Prospectus Offer will be determined by the size of the take up from the SPP) but the entire Program will not raise more than $15 million.

The Prospectus Offer will invite existing and new shareholders to subscribe for shares under the Program at a price being:

  • not less than 80% of the volume weighted average market price of the Company's ordinary shares, calculated over the last 5 days on which sales occurred immediately prior to the date of the Prospectus. The price so determined will not be greater than $0.25 per ordinary share.

It is intended that the Issue Price of the shares under the SPP and the Issue Price of the shares offered under the Prospectus will be the same price.

Commenting on the Program, Chairman Mr Adam Johnson said "This capital raising aims to bring the Flax Oilfield into production. It will provide existing loyal shareholders the opportunity to participate, and enable the Company to introduce its exciting projects to potential new wholesale and retail investors."

Application of Funds

The funds from the Program will enable the Company to execute its short to medium term objectives pursuant to its business plan, including to carry out Phase 1 of the 2007 Work Program, retire some debt and make a contribution to working capital as described below.



Proposed Application of Funds	 	Amount ($)
assuming
Maxim
Subscription
Raised from
Program
Phase 1 development of the 		$5.75m
Flax Oil Field

Drilling the saddle between the Flax 	$1.50m
and Juniper Oil Fields to test the 
possibility that Flax and
juniper are connected.

ATP 543P South Exploration 		$0.75m
Working Capital 			$1.90m
Repayment of Debt 			$4.00m
Costs of the Capital Raising Program 	$1.10m
TOTAL 					$15.00m


Next Steps and Key Dates

The Company will need to undertake a number of corporate activities to successfully complete the Program including the following:

1. Issue SPP Documentation;
2. Convene a meeting of shareholders to seek approval for certain resolutions associated with the Program; and
3. Lodge the Prospectus.

Set out below is an indicative timetable of key dates, the Company notes these dates are subject to change and the Company will keep the market fully informed as to the timing of the relevant events.



Activity 			Indicative Date
Lodge SPP Documentation 	27 Feb 2007
Record Date SPP 		27 Feb 2007
SPP Closing Date 		20 March 2007
Hold General Meeting of 	26 March 2007
Shareholders 	
Lodge Prospectus 		26 March 2007
Close Prospectus 		11 April 2007


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