Ellora Energy Inc., Boulder, Colo., says it has closed a $40 million private placement of its Series A 6% convertible preferred stock.

The company sold 1 million shares of the convertible stock, representing 10% of its outstanding shares, at $40 per share in a non-brokered deal. Each share of the stock is convertible into 4.4444 shares of common stock.

Ellora chief financial officer Steve Enger says, “The private placement completed this past February is a meaningful event for Ellora Energy. It provides us with the capital required to further strengthen and grow our core assets. It affords us with more than adequate borrowing capacity under our credit facility and gives us flexibility to pursue our 2009 plan and to continue to deliver value for our shareholders.”

Ellora has assets in southwestern Kansas in the Hugoton Field and in East Texas/Louisiana in the James Lime and Haynesville shale plays.