Gas development company Galilee Energy (ASX: GLL) has raised around A$5.66 million before costs as part of a placement to sophisticated investors.
Galilee has opted to issue 14,155,000 shares at A$0.40 each, representing a 9% premium to the 15-day volume weighted average price of A$0.367 and a 4.8% discount to Galilee’s closing price of A$0.42 last week.
According to the gas explorer, the net proceeds of the funds raised from the placement will be used to assist in progressing the Glenaras gas project and to meet all other general working capital expenses.
In its most recent pilot operational update, Galilee said that “production will continue to be ramped up over the coming weeks to achieve full reservoir drawdown.”
Coal seam gas in Queensland
The Glenaras gas project is located in the western portion of Queensland’s Galilee Basin and is highly prospective for coal seam gas (CSG) with an independently certified 3C contingent resource of more than 5,313 PJ.
Galilee is working on creating a mid-tier exploration and production company building on its core strengths in CSG appraisal and development. Its primary focus is Queensland where it is appraising the Galilee Basin while looking to add further acreage to its portfolio.
“The company is now in a very strong financial position and, subject to continued strong performance of the pilot wells, is well positioned to progress the Glenaras Gas Project through to its maiden Reserve booking,” said Mr Peter Lansom, managing director of Galilee.
Since Galilee gained full ownership and control of the Glenaras gas project in late 2015, the CSG project has become the company’s prime concentration.
Developing a CSG project currently is proving to be well-timed. Existing gas supply problems and looming supply constrictions bode well for Australian CSG developers with Galilee Energy looking to establish a solid stake despite its junior status.
According to Galilee, the Glenaras gas project has one of the largest remaining uncontracted gas resources on the east coast of Australia.
Additionally, continuous production has been achieved in the pilot operation currently underway.
“The results so far are extremely encouraging, with the water rates at the upper end of our pre-drill expectations. We have seen pressure drawdown in the monitoring well and the communication between the lateral wells is direct evidence of the reservoir shielding that we were anticipating,” said Mr Lansom.
Today’s capital raising news was taken positively by investors and helped to take Galilee’s shares up 17% to A$0.49 per share in early afternoon trading.