The SPP, involving the placement of 55 million shares at 42.5c each, follows a memorandum of understanding signed by Eastern Star and partner Gastar Exploration, to supply Babcock & Brown with 40 petajoules of gas per annum from their Narrabri gas project in New South Wales.

The MOU also allows for the expansion of gas supplies to meet requirements of power station developments at other locations.

Eastern Star told the market on Friday that the SPP funds would be spent on an extensive corehole program, designed to delineate new prospective areas beyond the Bibblewindi production pilot in the Bohena project area.

In addition, the funds will be used to accelerate the expansion of the Wilga Park power station and associated infrastructure, which would use additional gas generated by the expanded reserves program.

Eastern Star’s SPP plan follows the placement of $25.85 million of shares to sophisticated and institutional shareholders in September.