(MENAFN- ProactiveInvestors - Australia) Rey Resources (ASX: REY) will acquire an additional 15% stake in two Petroleum Exploration Permits in the Canning Superbasin, Western Australia, from Buru Energy (ASX: BRU) for $6 million.
The acquisition increases its interests in EP457 and EP458 - which cover parts of the Ungani oil trend, the Laurel tight gas formation and the Goldwyer Shale - to 25%.
Rey's existing 10% interest is free-carried until the grant of a petroleum production licence. Following completion of the transaction, Rey will be required to contribute 16.7% of the forward capital expenditure to production
The company will fund the acquisition and its share of the 2013 work program from its current cash holding of $8.5 million plus another $3 million that it expects to raise from a proposed equity placement.
Operator Buru is currently reviewing the geology and prospectivity of the Fitzroy Blocks with a view to undertaking an on-ground exploration program.
This is likely to include additional seismic programs over some of the attractive prospects already identified, with a view to drilling exploration wells on the Ungani trend and the other highly prospective areas in the permits as soon as possible.
Ungani and Laurel
Exploration carried out by Buru has identified an immediate area of prospectivity that extends across the Fitzroy Blocks with a regional review defining Mean risked Potential Prospective Resources for the greater Ungani exploration area of more than 300 million barrels of oil across 20 leads and prospects.
The Laurel Formation has the characteristics of a Basin Centred Gas Accumulation and may host 9 trillion cubic feet of gas and 260 million barrels of condensate in the Valhalla discovery area within Buru's acreage.
Proposed Equity Placement
Rey has executed a share subscription agreement with Hong Kong-based investment company Crystal Yield Investments Limited.
Crystal Yield will subscribe for 55 million Rey shares priced at $0.055 each, giving it about 9.7% of Rey's issued securities.Â
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