18/03/2013 - 13:52

Rey Resources, Mitsubishi buy into Buru permits

18/03/2013 - 13:52

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Rey Resources, Mitsubishi buy into Buru permits

Buru Energy has sold off interests in two petroleum exploration permits in the Canning Basin to Rey Resources and Japan’s Mitsubishi Corporation for cash considerations of around $21 million.

Buru announced today that Rey Resources had acquired a 15 per cent stake in two of the permits, EP457 and EP458, known as the Fitzroy Blocks, for just over $6 million.

Rey said the acquisition would increase its interest in the Fitzroy Blocks to 25 per cent, including the rights to its share of conventional oil and gas as well as shale gas.

And in the second component of the transaction, Mitsubishi will acquire a 37.5 per cent interest in the blocks from Buru for just over $15 million.

Following completion of the transactions, Buru will remain operator of the blocks with its 37.5 per cent stake.

The deals are expected to be completed in April, following receipt of regulatory, foreign investment review board and shareholder approvals.

Buru Energy executive director Eric Streitberg said the company was delighted to realise value for its interests in the Fitzroy Blocks in a way that was mutually beneficial for all parties.

“The receipt by Buru of some $21 million in cash, together with our existing cash on hand, removes the need for any capital raisings in the near term,” Mr Streitberg said in a statement.

“The transaction also confirms Buru’s focus on capital management and adding value for shareholders.”

Rey Resources’ management said in a statement to the ASX that they regarded the acquisition as company transforming.

Rey Resources now has a meaningful position in the highly prospective Canning Superbasin that we believe will create significant additional value for our shareholders in the short to medium term,” Rey managing director Kevin Wilson said.

“As a result of our 10 per cent free carried interest, Rey will only be required to fund 16.7 per cent of the capital expenditure requirements as part of future exploration drilling and development programmes.”

Mr Wilson said Rey would pursue its strategy of developing oil and gas prospects in light of soft thermal coal market conditions.

At close of trade today, Rey Resources shares had gained 1.1 cents, to finish at 6.1 cents, while Buru Energy’s stock fell 18 cents, to close at $2.55. 

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