Blue Energy Raising $3.2m to Drill New Sapphire Gas Well in Queensland

Blue Energy (ASX: BLU) has received firm commitments for the first stage of a $3.2 million placement to support the drilling of a new well at its Sapphire project in Queensland’s North Bowen Basin to enhance gas supplies on Australia’s east coast.

The company is conducting the placement in two tranches via the issue of 640 million shares at a price of $0.005.

Blue Energy has also revealed plans to offer eligible shareholders the opportunity to participate in a share purchase plan to raise up to an additional $250,000.

Strong Investor Support

The unconditional first stage of the placement to raise approximately $1.4m received strong support from new and existing institutional and sophisticated investors, while company chair John Ellice-Flint has committed to investing $200,000 in the $1.8m conditional second tranche.

Blue will apply the proceeds from the placement on preparations, planning and approvals for the drilling of a pilot well in the Sapphire block (permit ATP 814).

The company also intends to work with government and other local companies to progress a multi-user pipeline that will connect the undeveloped North Bowen gas province to the east coast gas grid.

“It is clear that there is an understanding from investors of the importance of securing new natural gas supply for domestic manufacturing and the nation’s economy,” Mr Ellice-Flint said.

Recent Run of Success

The capital raising comes as Blue Energy continues to make breakthroughs at Sapphire.

Earlier this month, Blue successfully restarted production at the project’s coal seam gas pilot program after the Sapphire 6V well experienced mechanical issues.

The company is also powering ahead with its Sapphire development plans after it won a two-year long court challenge during the June quarter.

The state’s land court has since issued Blue an environmental authority over the area.