Blue Energy secures R&D tax rebate, boosts Sapphire gas project in Queensland
Blue Energy (ASX: BLU) has received a nice cash injection to its bank balance as it prepares for an active season of developments at its Sapphire gas project in Queensland.
Following on from a claim lodged with Austrade and the Australian Tax Office in the last quarter of 2023, Blue has now received its $7.05 million research and development (R&D) tax incentive rebate for the 2023 financial year.
Apart from being used to further the Sapphire development, Blue has applied some of the new funds to repay a $1.951m loan from R&Dium Capital.
In announcing the lodging of the R&D claim in November, Blue reported it had agreed terms with R&Dium Capital on a framework for a debt facility of up to $1.9m secured against the claim.
R&Dium Capital is a leading R&D finance provider, offering strategic capital by early access to R&D refunds, reducing the need for dilutive equity raising.
Managing director John Phillips said Blue now has an unaudited current cash balance of $6.64m.
“Blue’s eligibility for the R&D rebate highlights Blue’s innovative approach to gas exploration as assessed by both Austrade and the ATO.”
“[It] provides Blue with significant, non-dilutive funding for the ongoing exploration and appraisal of its portfolio of domestically-focused gas exploration projects.”
Sapphire pilot campaign
While Blue has a significant portfolio of petroleum assets, its current focus is on progressing a pilot program at its Sapphire gas project in Queensland’s North Bowen Basin.
The company has recently been conducting a pressure build-up survey to assess the connectivity between the Sapphire 5 and Sapphire 6 pilot wells.
This procedure was designed to re-pressurise the coal faces and attempt to alter the relative permeability of the coal in preference to gas rather than water.
The company believes this enhanced relative permeability to gas should then result in optimised gas flow.
Reserves and resources
In mid-October 2023, Blue released a significant reserve and resource update for the Sapphire block.
Using data from a 2022 pilot drilling campaign, independent reserve certifier Netherland Sewell and Associates of Dallas, Texas was contracted to provide an upgraded assessment of the reserves and resources allotted for the Sapphire block.
The study returned an increase in 2P (proved and probable) and 3P (proved, probable and possible) gas reserves to 91 petajoules and 287pJ, respectively.
The increase in Sapphire 2P reserves reflected 80% of total envisaged gas supply volume required under a non-binding memorandum of understanding between Queensland Pacific Metals (ASX: QPM) and Blue.
The contingent resources for Sapphire were also increased to 256pJ, taking the aggregate 3P+2C (best estimate) gas resource in Sapphire to 543pJ of recoverable gas.
The Sapphire block is located 3 kilometres from the node 3 compressor of the Moranbah gas project owned and operated by Queensland Pacific Metals Energy.