Why is this ASX energy stock plunging today?

Shares in Beetaloo Energy Ltd (ASX: BTL) have plunged after the company revealed it had raised $66.3 million in new capital via a discounted share placement to institutional and sophisticated investors.

Skin in the game

The company said in a statement to the ASX on Friday that its directors had also agreed to invest in the capital raise, contributing $430,000 between them.

Existing shareholders would also be able to apply for new shares up to a total value of $5 million, at the raise price of 28 cents.

The company’s shares fell from the previous close of 32 cents on the news to be changing hands for 30 cents, down 13%.

The company said it also had access to a $45 million debt facility, which was earmarked for the refurbishment and construction of the Carpentaria gas plant and associated infrastructure.

Managing Director Alex Underwood said the capital raise put the company in a good position.

This Placement marks a pivotal moment for Beetaloo Energy. The participation by existing and new investors reflects genuine conviction in the potential scale of our Beetaloo Basin acreage and projects in the Northern Territory. The Placement received strong support from a broad range of existing and new shareholders including several Australian and international institutional investors. The Beetaloo Basin represents one of the most significant hydrocarbon opportunities in the world. Recent capital initiatives and commitments by Beetaloo Energy, Tamboran, Formentera Partners, Inpex and Santos will see approximately $1 billion invested in the basin over the next 18 months, representing a significant ramp up in activity. With this raising, combined with the upsized $45 million Midstream Infrastructure Facility (undrawn), we are now fully funded through to first pilot gas sales expected in Q4 2026, a milestone that we believe will be transformational for Beetaloo Energy and for Australia’s domestic gas supply.

The new capital raised would be used for the completion of the Carpentaria gas works, continued flow testing at the Carpentaria-5H well, long-lead items for the future work program, and the acquisition of additional seismic data, among other things.

Shares looking cheap

Canaccord Genuity recently issued a research note on Beetaloo Energy, with a speculative buy recommendation on the stock and a price target of 45 cents.

The analyst team said the company’s assets represented “an increasingly derisked opportunity”.

Canaccord said if Beetaloo’s pilot project proved commercial, “we expect majors to move quickly, with Beetaloo’s strategic foothold and first-mover advantage positioning it as a prime beneficiary of the basin’s potential re-rating”.

Beetaloo Energy was valued at $430.3 million at the close on Thursday.

The post Why is this ASX energy stock plunging today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.