Sino Gas & Energy Holdings Ltd. has secured an agreement to raise $48.3 million (AUD $53 million) to advance a seismic, drilling and development program at its production sharing contracts (PSC) in China.
The company holds a 65.75 percent interest in the Linxing PSC with China United Coalbed Methane Corporation Ltd. (CUCBM), and a 49 percent interest in the Sanjiaobei PSC with PetroChina Coal Bed Methane (PCCBM). Both unconventional gas contracts are located in the Ordos Basin onshore China.
ASX-listed Sino Gas said the funds, to be raised under a two-tranche arrangement at $0.18/share (AUD $0.20), would also provide additional working capital for the company.
Tranche one of the agreement involves the issue of 189.6 million shares to raise $34.5 million (AUD $37.9 million) by December 3, while tranche two will see 75.4 million issued by December 30 to raise a further $13.8 million (AUD $15.1 million).
Sino Gas Managing Director Robert Bearden said the company was delighted with the strong demand shown for the placement.
“Sino Gas is in an exciting phase of development of its unconventional gas assets in China’s Ordos Basin and is very focused on commercializing the assets,” Bearden said in a statement.
The company last week released an operational update to the end of October, reporting that over 180,400 feet (55,000 meters) had been drilled during the year and it was successfully moving towards completion of the 2013 drilling program.
It said 29 wells had been drilled, with one well continuing to drill to total depth and a rig was mobilizing to Linxing West to drill the program’s final well.
Testing operations were continuing on both assets, Sino Gas added. At Linxing, the company’s first horizontal completed drilling in October and was expected to begin testing this month.
At Sanjoaobei, the 2013 drilling program was completed in October, with testing also undertaken on the first five payzones, while another 18 payzones had been fracked and were undergoing testing.
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