In an encouraging sign from the market, institutional investors have also taken an interest, shelling out an additional $6.6 million to take the total capital raised to $21.6 million.

The convertible notes have an issue price of 60 cents, a 12% coupon (payable quarterly in arrears) and expire on 1 June 2006.

Over the past 12 months, Sydney Gas has put in place $70 million in new funding to expand the Camden Gas Project and to kick-off a five well pilot project in the Hunter Valley.

A third gas project within Sydney Gas' acreage (covering 6 million acres) in the Sydney Basin is being planned.