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Gas proposal setback

AUSAM Resources’ bold plan to raise $6 million to exploit two gas reserves near Perth through an unlisted prospectus has failed.

The company will now pursue an Australian Stock Exchange listing later this year.

The $6 million was needed to buy eight exploration permits and raise working capital to unlock the Warro and Walyering fields in the North Perth Basin.

The two fields were discovered in the 1970s and together hold a gas resource similar in size to the Goodwyn field on the North West Shelf.

However, drilling technology of the day was not sufficient to ensure economically viable gas extraction.

AusAm plans to use US-developed underbalanced drilling to extract the resource.

The technique creates a ‘controlled’ gusher of gas while protecting the reservoir from damage.

AusAm joint managing director Terry Barr said the company now planned to privately raise $2 million to secure a reduced portfolio of exploration permits.

The vendors have agreed to take equity in AusAm as part of the purchase.

Mr Barr believes the prospectus was under-subscribed because AusAm was not a listed company.

“We are still in negotiations with a substantial gas consumer in WA and we anticipate attracting a US petroleum partner once the exploration permits have been secured,” Mr Barr said.

The AusAm plan has the potential to change the face of the WA gas market.

Currently the North West Shelf supplies 90 per cent of the state’s gas.

Mr Barr believes his company will be able to sell gas at between 80 cents and $1 more cheaply than producers on the North West Shelf.

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