Placement, debt to fund Sunshine discovery as ATO knocks back tax scheme

A combination of equity capital and project debt will fund the development of the Overston gas discovery, if plans by 100% owner Sunshine Gas bear friut. The commercialisation of Overston, the first well the company drilled since listing, will go some way to assuaging the disappointment of having the Australian Tax Office (ATO) knock back its tax effective drilling scheme plans.

Sunshine said earlier this week it was raising $2 million at 20c and said yesterday Westpac had been asked to arrange a project finance facility to fully develop the project. Sunshine said this would cover the costs of further drilling and infrastructure costs.

It also said it was in discussion with three parties who have indicated their interest in farming into the Overston discovery.

Independent reserves figures by respected industry explorationist, MBA Petroleum Consultants, increased mean gas in place in the Overston discovery by 140% to 137bcf (billion cubic feet.) The imminent production testing will give the more precise receivable reserves figure, expected in a month's time.

Sunshine also announced a farm-in deal to Santos' 2001 Tardrum well, which has been calculated as having a mean gas in place resource of 128 bcf. Sunshine can earn 100% in three phases, with Santos able to claw back to varying degrees as the project progresses.

Sunshine termed the play as low risk appraisal, with Westpac maintaining its market share in the CBM sector by providing project funding to develop the Tardrum prospect.

Tardrum-1 logged a gross gas column of 512 metres, with gas shows peaking at 800 units when it was first drilled.

Chairman John Towner said the Tardrum program was targetting both conventional and coal bed methane producing formations.