Emerging gas producer Blue Energy (ASX: BLU) has raised $20 million in a “strongly supported” placement to institutional and sophisticated investors to fund additional appraisal drilling at its ATP 814 in Queensland’s North Bowen Basin.
Under the placement, Blue issued almost 322.6 million new shares at $0.62 each, which was an 18.4% discount to the company’s 10-day volume weighted average trading price.
Commenting on the raising, Blue managing director John Phillips said the board had been “delighted” with the “strong level of support” from both current and new shareholders.
“It is clear that there is an understanding from investors of the importance of natural gas supply into the east coast market and the reliance of manufacturing on natural gas, as well as the need for natural gas as a supply for gas fired electricity generation to firm the increasing levels of wind and solar energy in the national energy market mix.”
“This has been in stark view recently as the Australian Energy Market Operator (AEMO) has needed to intervene in both the electricity and gas markets to maintain system stability.”
Mr Phillips added that more new gas supply was “crucial” to providing energy security across the east coast.
Advancing ATP 814
Of the $20 million placement proceeds, $8 million will be used to fund additional pilot appraisal drilling and production testing at ATP 814 and accelerate the pilot well gas production at the Sapphire Block within the permit.
The well appraisal program at the Sapphire Block aims to build resources and reserves.
In addition to funding work at ATP 814, placement proceeds will also be used to advance Blue’s other assets.
In the Surat Basin, $5.3 million has been allocated to drill a vertical and two lateral wells in the Permian coals.
Over in the Northern Territory’s Greater McArthur Basin, $3.6 million will fund 2D seismic acquisition.
The remaining proceeds will be used for working capital and offer costs.