Quarterly Activities Report
Brisbane, Jan 30, 2026 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) released the update for the quarter ending 31 December 2025 ("the Quarter"). In conjunction with establishing a substantial maiden 2P reserve during the Quarter, funds raised through issue of convertible notes ("the Notes Transaction") provide a strong financial platform upon which State Gas can advance its flagship project - Rolleston West ("Rolleston West" or "the Project").
HIGHLIGHTS:
- Maiden 2P gas reserve of 30.2 PJ independently certified for the Rolleston West Project
- Establishes a reserve base capable of supporting the commercial development of a 10TJ/day pipelineconnected gas project with significant expansion capability
- Provides a strong platform for negotiating project financing, gas sales agreements and long-term development partnership for the project and supporting infrastructure
- $3.2 million raised through issue of unsecured convertible notes at a 33% premium to the closing price on 3 December 2025
- Funding allows the Company to accelerate predevelopment activities for the Rolleston West Project
The establishment of a large gas reserve capable of economically supporting the first 10 years of gas production is a major step toward developing a significant gas project and one that positions the Company for immediate strategic engagement with large gas consumers, traders, retailers and exporters, infrastructure investors and project investors/financiers. These milestones have been achieved at the right time, with the macroeconomic outlook for energy markets in Australia remaining positive and an ongoing recognition that gas-fired electricity generation is critical to the stability and reliability of Australia's electricity grid. Proceeds from the Note Transaction will enable State Gas to rapidly advance its planning and pre-development activities for the Rolleston West Project.
Rolleston West Project - 30.2 PJ Maiden reserve.
During the Quarter, State Gas achieved independent certification of a maiden proven plus probable (2P) gas reserve of 30.2 petajoules (PJ) for its Rolleston West Project ("Rolleston West" or "the Project") in central Queensland. Internationally recognised subsurface consultancy and reserves auditors Netherland, Sewell & Associates, Inc ("NSAI") has provided independent certification based on data from completed wells and extended production testing within the Project area, in conjunction with their independent geological and reservoir engineering evaluation. Importantly, the 30.2 PJ reserve estimated was derived from only four wells drilled in the Project area.
Noting the Rolleston West Project is in the pre-development stage, NSAI independent assessment confirms that the 30.2PJ of 2P gas reserves (in conjunction with a further 13.9PJ of 3P reserve) are economically capable of supporting the economics of a long life, 10TJ/day coal seam gas ("CSG") project, capable of providing pipeline quality gas to both the East Coast domestic and export markets. The independently reviewed project feasibility model demonstrates attractive returns on capital required for the gas field development, an appropriately sized gas processing plant and permanent pipeline infrastructure that would connect the Rolleston West Project area to the Gladstone/Wallumbilla gas pipeline network.
Assuming success in future drilling campaigns in the 3P reserve zone and adjacent area which contains a large 2C resource base, the development and operation of a long-life gas project in the Rolleston West area is attractive. This is a significant value marker for the Company and demonstrates an intrinsic value in the Company's assets many times its current market capitalisation.
The 2P reserve provides a strong economic foundation for State Gas to advance funding solutions previously not available, thereby allowing the Company to more rapidly progress detailed engineering and gas sales negotiations, engagement with infrastructure providers and discussions with co-investment partners necessary for the long-term development the Project. State Gas is now focussed on enhancing Project value through:
- Completing concept and pre-FEED/FEED studies for gas processing, compression and export infrastructure, including integration with State Gas' existing HDNG(R) facilities;
- Seeking the relevant environmental and regulatory approvals for a petroleum lease which will support the development and operation of the Project;
- Advancing commercial discussions with potential gas off-takers (both domestic and international), including industrial users and power generators seeking to secure medium to long-term gas supply; and
- Negotiating the introduction of project co-investment partner/s who are capable of supporting long term development of the Project.
During the Quarter, State Gas commenced initial engagement with potential co-investment partners around strategic and financial support for the Project through potential farm-out, joint venture participation, off-take and/or gas presale. Over the coming quarters, State Gas will also commence initial engagement around project infrastructure financing opportunities from both private and public sector lenders.
HDNG Operation
State Gas is continuing to promote the efficacy of HDNG as a diesel fuel alternative to other mines and industrial users in the Bowen Basin and surrounding areas. The Company is in ongoing advanced discussions with several coal mines owners about HDNG supply and the broader application of its HDNG technology to support diesel fuel reduction and the commercial utilisation of gas arising from underground coal mine development. Diesel substitution with HDNG has the 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 for State Gas, with diesel fuel consumption by coal miners in the Bowen Basin in excess of $2bn per annum and our solution capable of replacing between 50 and 70% of that diesel usage.
Reid's Dome
There are significant physical and commercial synergies between Reid's Dome (PL 231) and Rolleston West which provide State Gas with optionality to increase HDNG production. In addition to the potential for increased HDNG supply, the Company has commenced investigations into the use of conventional gas at Reid's Dome to support local power generation for remote data centres, accelerated computing and token generation. The Company believes there is an opportunity to commercialise gas from both ATP 2062 and PL 231, using a combination of virtual pipeline and traditional pipeline infrastructure. Subsequent to announcement of the 2P reserve at Rolleston West, there has been renewed interest from several parties in strategies to commercialise conventional and CSG prospects within PL231 leveraging shared gas infrastructure in line with this concept.
Land Access
Significant time and cost continue to be expended in defending the Company and protecting its Rolleston West Project Assets as a result of an ongoing an access dispute with the landowner at ATP 2062 dating back to September 2024. The parties were unable to resolve these matters through an independent mediation process and both the Company and the landowner have now respectively instigated proceedings for claims of costs and losses and these matters are currently at an early stage in the Land Court of Queensland.
State Gas' objective is to undertake its exploration and appraisal activities in a co-operative manner with landowners and through the payment of appropriate compensation for access and disturbance which arises as a consequence of these activities. Enforcing the Company's access rights and protecting its assets is in the best interests of all shareholders as it is ensuring that there is a commercially sustainable regime for access and compensation for activities on the property as we continue to advance the Rolleston West Project.
A significant portion of the engagement between the parties has been confidential or subject to legal privilege and consequently the Company is restricted in what it is capable of publicly disclosing about these matters.
We continue to work toward resolution of these matters.
$3.2M raised through issue of Convertible Notes
During December 2025 the Company raised $3.2 million from sophisticated and professional investors subscribing for convertible notes ("the Note Transaction"). The relevant approvals in respect of the Note Transaction were obtained at a general meeting of shareholders convened on 21 January 2026 and all proceeds were received by the Company post the end of the Quarter. The conversion price of the notes (and strike price of attaching options) are both at a premium to the Company's prevailing share price reflecting a recognition of the intrinsic value in the Company's assets after announcement of the 2P reserve. Importantly, it reflects a more efficient capital solution for existing shareholders than the alternative of a dilutionary placement or entitlement offer. Strong support for the Note Transaction reflects strong investor confidence in the commercialisation strategy for Rolleston West subsequent to the announcement of the maiden 2P Reserve. It also provides immediate capital which allows the Company to accelerate pre-development activities for Rolleston West.
The Notes have a conversion price of $0.04 (4.0 cents) for the first 16 weeks after the payment date and thereafter have a conversion price which is the lesser of $0.04 (4.0 cents) or a 20% discount to the 15-day VWAP of State Gas shares at the time. The Company can require conversion of Notes into ordinary shares of State Gas if not converted or redeemed prior to their maturity in June 2028. In lieu of interest State Gas has issued each Note holder unlisted options ("Options"). Note holders will receive one (1) attaching option for every (2) ordinary share entitlements under the issue. Options are exercisable at $0.05 (5.0 cents) and expire 30 months from the date of issue.
State Gas has conversion and early redemption rights subject to certain conditions which are outlined in the detailed terms of the Notes and Options set out in the ASX announcement made by the Company on 8 December 2025.
Outlook
The Company is now focussed on developing the commercial frameworks described above to support accelerated delivery of the of Rolleston West. These actions will require significantly less capital than prior years and will add substantial value to the Project and the Company when achieved over the coming twelve months.
The resolution of the ongoing Landholder dispute through the Land Court Process or direct commercial negotiation remains a priority, as does continuing to pursue customers for the Company's HDNG technology.
However, with a reduced cost structure, a significantly improved capital position, and a narrowed focus, State Gas is well-positioned to capitalise on what it believes is a continually expanding opportunity set for natural gas on the east coast of Australia.
*To view the full Quarterly Report, please visit:
https://abnnewswire.net/lnk/VVW70P8L
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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