Annual Report to Shareholders
Brisbane, Sep 30, 2025 AEST (ABN Newswire) - With funding support from the Queensland Government, State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) further extended its geological and productive capacity of the eastern area of ATP 2062 ("the Rolleston West Project" or "the Project"), confirming its hypothesis that there is a large body of high quality CSG which is continuous across many square kilometres and demonstrates good permeability capable of supporting a substantial gas project. In conjunction with historical performance data from the Rougemont 2/3 dual lateral well system, data from the two new wells will enable State Gas to establish a maiden 2P reserve for the Project. The 2P reserve estimate will support further investment in the Rolleston West Project, in particular the commencement of option studies for plant design and pipeline connection and the application for permanent production tenure. It will also facilitate engagement with potential customers and infrastructure providers who can support project investment and delivery of gas into the Wallumbilla pipeline network.
During the year, the HDNG plant was commissioned and compressed gas sold to the Company's first customer - a coal mine in the Bowen Basin benefited from non-pipeline delivered gas for industrial applications such as diesel substitution.
The Company is committed to the alternative fuels opportunity created through its investment in HDNG technology. Diesel substitution with HDNG has great potential to deliver significant emission reductions, quickly and at low cost for existing fleets of equipment, while simultaneously de-risking the miner to significant price volatility for diesel. This is a significant opportunity, with diesel fuel consumption by coal miners in the Bowen Basin in excess of $2bn per annum. We have now demonstrated a pathway for gas to be brought to market while pipeline infrastructure is planned and constructed for the Rolleston West project. We have a range of opportunities for this gas now that we have proven the technology.
The Company's Board and management have significant understanding of energy markets and have a track record of delivering cost effective energy solutions to its customers in a dynamic and challenging market. My personal experience in bringing new technology to market across a range of industries is that it is not easy and not without risk, but can deliver significant reward if we are ready to respond quickly to demand.
Achievement of these milestones has not been without its challenges and significant management time was spent defending the Company under an access dispute with the landowner at ATP 2062. The Company is working diligently with the landowner to improve its operational procedures when working on the property, to ensure ongoing compliance with the landowner's organic certification obligations. Notwithstanding, the Company incurred significant direct and indirect costs and losses arising from what is in the Company's view, the unlawful action by the landowner of locking us off the property in November 2024 and May 2025. The Company's access was reinstated on both occasions, but these interruptions impacted the planned program of works from both a time and cost perspective. Both the Company and the landowner have now instigated proceedings for claims of direct and indirect costs arising from land access dispute and these matters are currently at an early stage in the Land Court of Queensland.
The Directors are cognisant of the Company's restricted capital position and have implemented a range of initiatives in accordance Capital Management plan described in the announcement of 27 May 2025, improve short term liquidity and support ongoing operations. Critical to that strategy is the success of further material R & D grant claims made in respect of the capital costs of the HDNG plant. The Company is working now to accelerate payment of the underlying grant claims or implement a funding structure secured against those future grant payments. Now that the two well exploration program is complete, the Company has full discretion over future exploration activity and has aligned overheads with near-term objectives and the availability of capital.
Looking ahead, the Company is focused on three critical priorities: securing independent certification of its maiden 2P reserve, securing new HDNG sales contracts and progressing plans for permanent tenure and a pipeline connection to support development of the Rolleston West Project.
These activities are significantly less capital intensive than the work undertaken during the FY24 and FY25 financial years. 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 remains well-positioned to support the growing energy demand on the East Coast of Australia.
Phil St Baker
Non-Executive Chairman
*To view the Annual Report, please visit:
https://abnnewswire.net/lnk/QR7524BZ
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.
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