Italian oil producer Saffron Energy gears up for an Aim listing
The London Stock Exchange's junior float market is set to gain another new energy firm this month.
Saffron Energy, which was established in November 2016 to acquire Northsun Italia, is a producer and explorer of natural gas based in Northern Italy. It announced last night it is expecting to launch its initial public offering (IPO) on 24 February on the Alternative Investment Market (Aim).
The small energy firm is expecting a market capitalisation of around £7m after raising £2.5m.
Saffron will work in three core natural gas fields, which come from Po Valley, an Australian oil and gas firm that will retain a majority stake in Saffron after the listing.
Funds raised from the IPO are planned to go to accelerate development of the current fields – Sillaro which began production in 2010 and Bezzecca which will start production in the first quarter of this year. New funds will also help Saffron meet expenses of its Sant’Alberto gas field, which is expected to produce gas in the third quarter of 2017.
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Adding new fields to Saffron's current production, will generate strong returns and cashflows, the company said in a statement.
"Italy is very good market to have gas fields in," said Saffron’s Chief executive Michael Masterman. The purity of the gas means it "basically goes straight onto the Italian national grid from the well," he added.
Masterman said the company's production will go up from 1.5m cubic feet to 4m cubic feet in the next couple of years.
"That’s a very good base to build a strong business on," he said.
Miners and oil and gas companies are expected to make a comeback on the junior flotation market this year, a January report found.
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