Warrego Energy has received firm commitments for a $50 million placement, which will be used to fund its 50 per cent share of commitments for phase one of the West Erregulla gas project, Western Australia.
The company advised that the placement was very strongly supported, reflecting its future growth potential as one of the few new sources of supply into the WA domestic gas market this decade.
The funding will also go towards long lead items for the 87 terjoules a day gas processing plant and the upstream gathering system; un-budgeted costs associated with the re-entry, drilling, testing and completion of the currently suspended West Erregulla 3 well, 3D seismic over the balance of the EP469 permit; early-stage explorations activity at EPA-0127; and genera working capital.
The placement comprises two tranches, the first being $32.4 million and the second being $17.6 million.
Warrego managing director and group chief executive officer Dennis Donald said he is delighted to with the strong support for the placement.
“With major offshore projects delayed, significant volumes of Waitsia gas set for export, and the undrilled South Erregulla prospect earmarked for a urea plant, Warrego’s share of West Erregulla will be one of the few new sources of gas destined for the tightening WA domestic market,” he said.
“Spot prices in WA have been climbing towards $5 per gigajoule1 and we are already receiving numerous inquiries about the potential for West Erregulla Phase 2.
“Securing these long lead items will keep West Erregulla phase one moving forward as we progress through a period of high upcoming activity including flow testing the WE-4 and WE-5 wells, the re-evaluation and certification of West Erregulla reserves and resources, a gas processing agreement with third-party provider AGIG, and the finalisation of a banking club to provide project finance for the Phase 1 development.”
Donald added that the company is also developing its carbon strategy with an initial focus on West Erregulla.
“We are currently evaluating a range of carbon initiatives that will help us minimise and offset emissions during the production phase,” he said.