The West

Buru raises $50m for exploration
Buru raises $50m for exploration

UPDATE 10.30am: Eric Streitberg's Buru Energy has completed a $50 million institutional placement - the biggest in the Perth market darling's short history - to help fund a massive oil and gas exploration program in the Kimberley.

"It (the size of the raising) is about the right amount to be sure of our funding to at least the first six months of next year and not enough to provide any substantial dilution to shareholders," Mr Streitberg said.

"We just want to put ourselves in a strong position going forward."

Mr Streitberg's family is one of the biggest investors in the $752 million valued Buru with a stake of about 10 per cent.

The institutional placement is priced at $3 and will expand Buru's issued capital base by 7 per cent. Buru's shares were off 6.5 cents, or 2.03 per cent, to $3.145 at 10.30am.

It is Buru's second raising since the company was formed following AWE's $400 million takeover of Mr Streitberg's Arc Energy in 2008. The first, in September, was also arranged by JPMorgan and raised $17.8 million at 65¢ a share.

Since then Buru has made the Ungani discovery, which helped propel the company's shares as high as $3.85 in March.

Investor interest from Australia and overseas in the raising was strong, buoyed by Ungani and the shale gas potential of Buru's Canning Basin acreage that earlier attracted Mitsubishi Corp. Mitsubishi is funding 80 per cent of a $100 million exploration program for Buru, which had $17.3 million cash at March 31.

The Ungani oil field is tipped to contain up to 20 million barrels, which many analysts say is sufficient to underpin Buru's current market value, while the company says its Canning Basin acreage also had the potential to contain 20 trillion cubic feet of gas.

The second well of the Buru- Mitsubishi alliance, Paradise-1, has struck gas amid expectation it had intersected the same accumulation as the earlier successful well, Valhalla.

Buru has said the Valhalla accumulation could contain 6.5tcf and 187 million barrels of liquids.

Buru expects to use some of the freshly raised cash to advance development of Valhalla as well as the Yullerroo field, which contains an estimated 332 billion cubic feet of gas and 13.4 million barrels of liquids.

The West Australian

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