19/03/2010 - 10:56

Kilgore in $13m coal seam gas deal

19/03/2010 - 10:56

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Shares in West Perth-based Kilgore Oil and Gas were higher today after the explorer announced plans to buy a majority share in a coal seam gas company through a share sale deal valued at nearly $13 million.

Shares in West Perth-based Kilgore Oil and Gas were higher today after the explorer announced plans to buy a majority share in a coal seam gas company through a share sale deal valued at nearly $13 million.

Kilgore said it had entered into a share sale deal to acquire 51 per cent of private company Clarence Moreton Resources, which holds a 100 per cent interest in three permits in the Clarence Moreton Basin in New South Wales.

The permits are highly prospective for coal seam and conventional gas and cover an area of about 2,050 square kilometres.

The permits are located near Metgasco's tenements, where a proved and probable reserve of 396.7 billion cubic feet was recently announced.

Under the deal, Kilgore will issue 175 million full paid shares together with 175 million options, exercisable at five cents each on or before June 30 2012.

Based on Kilgore's latest share price of 2.2c, up 15 per cent on yesterday's closing price, ithe acquisition deal is valued at $12.6 million.

The acquisition is subject to due diligence and the completion of a $2 million capital raising.

Kilgore also has the option to secure the remaining 49 per cent of Clarence Moreton Resources through the issue of additional shares and options and the payment of an annual royalty on gross sales from the project.

"The excellent commercialisation opportunities with the mix of coal seam gas and conventional gas in a strategic location provides Kilgore with an excellent base for strong growth," Kilgore chairman Gordon Sklenka said.

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