Quarterly Activities Report
Brisbane, July 31, 2025 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) releases this update for the quarter ending 30 June 2025 ("the Quarter"). During the Quarter the Company completed two new exploration and appraisal wells at its Rolleston West Project (ATP 2062 and "the Project") in Queensland's Southern Bowen Basin. Using new subsurface information obtained from the drilling program, State Gas will establish an independently certified 2P reserve for the Project, with NSAI as the appointed independent certifier. The Company is also conducting production testing of these two new wells over the coming quarter.
HIGHLIGHTS:
- Rougemont-5 and Rougemont-6 successfully drilled and completed, with ~8 metres of net coal intersected in the Bandanna Formation.
- Wells are now being dewatered as part of the production testing process over the coming quarter.
- Netherland Sewell & Associates Inc ("NSAI") engaged for reserve certification.
- HDNG facility at Rougemont maintained in readiness for recommencement of supply.
- Good progress with capital management plan; sufficient funds available to meet current commitments.
EXPLORATION ACTIVITIES
The Company has completed drilling of the Rougemont-5 and Rougemont-6 vertical wells at its Rolleston West Project (ATP 2062). The two new vertical wells are located close to the existing Rougemont 2/3 dual lateral well system which produced saleable gas during the second half of calendar 2024. All previously encountered coal seams from the Rougemont well series were present in the two new wells, confirming lateral continuity of coal seams in a large area bounded by Rougemont-6 in the north, Rougemont-1 to the south and Rougemont-2/3 to the west. Each well intersected approximately 8 metres of net coal within the Bandanna Formation, consistent with geological predictions. Gas shows during drilling confirmed the lateral continuity and prospectivity of the formation to the north and east of the existing dual lateral well system (Rougemont 2/3). Production testing commenced in July 2025, with results expected to enhance both 2P reserve and 2C resource estimates for the Project.
State Gas has engaged NSAI to prepare an independent reserve and resource certification for the Project. NSAI has conducted reserves and resources assessments, technical studies, economic evaluations and advisory work for gas fields with conventional and unconventional reservoirs across global oil and gas markets. NSAI has deep experience in performing similar work for gas explorers and producers in Queensland and their reports and underlying evaluations are highly respected by the oil and gas, industry and financial community.
The Company has updated its geological models to incorporate new data from the two recently completed wells and NSAI is now working to have its Competent Persons Report for the 2P reserve estimate completed by the end of September 2025. Establishment of an independently accredited 2P reserve estimate for the Project will:
1. Independently verify a volume of commercially recoverable coal seam gas ("CSG") sufficient to underpin long term project economics;
2. Support the Company's application for a petroleum lease over a substantial portion of ATP 2062;
3. Allow State Gas to begin to negotiate access to pipeline infrastructure which can connect the Project to the Gladstone to Wallumbilla pipeline network; and
4. Enable the Company to pursue financing solutions to progress the Project with gas users and project coinvestors.
Successful completion and flow testing of the two new vertical wells is expected to reinforce the Company's expectation that the Project area has proven gas content and good permeability across a large area. State Gas intends to connect these wells to its high density natural ("HDNG") plant which will enable it to capture and commercialise production testing gas and increase the revenue generating capacity of the Plant.
In conjunction with its partners, State Gas continues to pursue opportunities to supply high density natural gas (HDNG) to potential customers in the coal mining industry. Following the success of the initial dual-fuel truck trial during calendar 2024 (for which State Gas was the fuel provider), State Gas remains optimistic that the implementation of dual fuel engine technology in large mining trucks, is a significant opportunity the coal sector, as it:
- Substantially reduces carbon emissions;
- Diversifies fuel risk and drives down operating costs; and
- Extends the life of existing diesel engines and reduces cyclical maintenance costs
State Gas is in discussions with a number of potential clients and the Queensland Government around the most efficient method to support the trial of dual fuel engine technology (supported by State Gas HDNG) at multiple Queensland coal mine sites. Whilst difficult macroeconomic conditions currently impacting the coal industry have slowed the pace of adoption of this important new technology, State Gas remains committed to the commercial opportunities arising from HDNG and plans to continue development of this organic revenue stream in conjunction with its ongoing expansion activities at Rolleston West.
FINANCIAL POSITION AND CAPITAL MANAGEMENT
Further to the announcement on 27 May 2025, State Gas' capital position improved during the quarter:
- The balance of funding under the $5.5 million Frontier Gas Exploration Grant was received during the quarter and residual payments associated with completion of the drilling program are now being finalised; and
- The Company received an interim payment from its insurer in respect of legal and other costs associated with resolving the access dispute that arose in September 2024. The Company continues to work with its insurers to finalise the claim.
During FY24, the Company made a substantial investment in developing a first-of-its-kind HDNG Pilot Plant as part of an eligible Research and Development ("R & D") Project. The Pilot Plant is designed to produce HDNG directly from raw coal seam gas ("CSG flare gas") and support a variety of industrial applications for customers who are remote from traditional gas pipeline infrastructure (a process not previously attempted in Australia).
Further to successful prior year claims linked to the design process, the Company is confident that further material R & D claims can be made in respect of the capital costs of the Pilot Plant. The Company is now in the final stages of obtaining credit approval for funding secured against those R & D claims. Further successful claims and associated financing solutions have the potential to materially strengthen the Company's financial position over the next two quarters.
Now that the two well exploration program is complete, the Company has full discretion over future exploration expenditure and has aligned overheads with near-term objectives and the availability of capital.
OUTLOOK
Funding secured against the R&D claim, and establishment of the 2P reserve for Rolleston West are the Company's critical near-term priorities. The positive exploration results achieved to date and the upcoming certification of Rougemont gas reserves both support the Company's previous comments that this will be an important and productive year for the Company. On 4 June 2025, State Gas and the Rougemont Landowner entered into a settlement arrangement allowing the Company to immediately resume activities on the Landowner's property.
The macroeconomic outlook for energy markets in Australia remains positive for the Company, with a continuing recognition that natural gas will play a substantial role in the provision of base load power, along with diesel fuel displacement while battery technology continues to improve over the long term. Based on the Company's ongoing exploration and development strategy, with particular focus on the Rolleston West Project and application of its unique HDNG capability, State Gas is well-positioned to support the growing energy demand on the East Coast of Australia.
*To view the full Quarterly Report, please visit:
https://abnnewswire.net/lnk/786364WF
About State Gas Limited
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) is a Queensland-based gas exploration and development company with highly prospective gas exploration assets located in the southern Bowen Basin. State Gas Limited's mission is to support east coast energy markets through the efficient identification and development of new high quality gas assets.
It will do this by applying an agile, sustainable but low-cost development approach and opportunistically expanding its portfolio in areas that are well located to gas pipeline infrastructure.
State Gas is 100%-owner of the contiguous Reid's Dome (PL-231) and Rolleston-West (ATP 2062) gas projects, both of which contain CSG and conventional gas. The Projects, together some 1,595km2 , are located south of Rolleston, approximately 50 and 30 kilometres respectively from the Queensland Gas Pipeline and interconnected east coast gas network. State Gas intends to accelerate commercialisation of these assets through the application of an innovative virtual pipeline ("VP") solution which will see the Company transport compressed gas by truck to existing pipeline infrastructure or to an end user.
State Gas also holds a 35% interest in ATP 2068 and ATP 2069 in joint venture with Santos QNT Pty Ltd (65%). These two new areas lie adjacent to or in the near vicinity of State Gas and Santos' existing interests in the region, providing for the potential of an alignment in ownership interests across the region over time and enabling synergies in operations and development.
State Gas is also participating in a carbon capture and sequestration initiative with minerals explorer Rockminsolutions Pty Ltd in respect of EPM 27596 which is located on the western border of ATP 2062. This project is investigating the potential of the unique basalts located in the Buckland Basaltic Sequence (located in EPM 27596) to provide a variety of in-situ and ex-situ carbon capture applications.
| ||
|
