State Gas Limited (ASX:GAS) Annual Report to Shareholders

The domestic gas market remains very tight and the extent to which it tightens is primarily driven by the rate of decline of Bass Strait production. Whilst only roughly a quarter of domestic gas is consumed in the electricity sector, with aging generators being replaced by intermittent power, the role of gas is becoming increasingly important in creating reliability in the grid. This dynamic looks as if it will increase over time and along with netback LNG prices will drive the domestic price. That being said, it is important that the supply /demand curve is not brought back into balance by what is euphemistically called "demand management" if that comes at the expense of industrial jobs.

State Gas Limited (ASX:GAS) has a golden opportunity to not only help the nation but also reap the rewards from doing so. Hence our new strategy "Target 2021" for our Reid's Dome Project in Petroleum Lease 231. This is an ambitious target from a timing point of view, but your Board and State Gas management remains committed to it. This strategy has three phases, the first of which has already commenced and is fully funded.

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About State Gas Limited

State Gas Limited (ASX:GAS) is a Queensland-based developer of the Reid's Dome gas field, originally discovered during drilling in 1955, located in the Bowen Basin in Central Queensland. State Gas is 100%-owner of the Reid's Dome Gas Project (PL-231) a CSG and conventional gas play, which is well-located 30 kilometres southwest of Rolleston, approximately 50 kilometres from the Queensland Gas Pipeline and interconnected east coast gas network.

Permian coal measures within the Reid's Dome Beds are extensive across the entire permit but the area had not been explored for coal seam gas prior to State Gas' ownership. In late 2018 State Gas drilled the first coal seam gas well in the region (Nyanda-4) into the Reid's Dome Beds and established the potential for a significant coal seam gas project in PL 231. The extension of the coal measures into the northern and central areas of the permit was confirmed in late 2019 by the Company's drilling of Aldinga East-1A (12 km north) and Serocold-1 (6 km to the north of Nyanda-4).

State Gas is also the 100% holder Authority to Prospect 2062 ("Rolleston-West"), a 1,414 km2 permit (eight times larger than PL 231) that is contiguous with the Reid's Dome Gas Project. Rolleston-West contains highly prospective targets for both coal seam gas (CSG) and known conventional gas within the permit area. It is not restricted by domestic gas reservation requirements.

The contiguous areas (Reid's Dome and Rolleston-West), under sole ownership by State Gas, enable integration of activities and a unified super-gasfield development, providing economies of scale, efficient operations, and optionality in marketing.

State Gas is implementing its strategic plan to bring gas to market from Reid's Dome and Rolleston-West to meet near term forecast shortfalls in the east coast domestic gas market. The strategy involves progressing a phased appraisal prog

 

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