Quarterly Activities Report
Brisbane, Oct 31, 2023 AEST (ABN Newswire) - State Gas Limited (ASX:GAS) (STGSF:OTCMKTS) is pleased to provide this update for the quarter ended 30 September 2023 ("the Quarter").
Following the successful capital raising transaction completed during the quarter, State Gas was able to complete the assembly of critical components of the Compressed Natural Gas ("CNG") Facility in its Brisbane construction yard. Civil works including the laying of foundations for the facility are currently being carried out. The compressor and dehydrator will be transported to site over the coming weeks in time for commissioning of the CNG Plant to commence in late November 2023.
By December 2023 the Company should be shipping initial cargoes of CNG. This revenue will be applied to fund the drilling necessary for reserve certification sufficient to underwrite the financing of the long-term pipeline infrastructure which will enable further scaling of the Rolleston West Project.
Successful capital raise
During the quarter, the Company raised $6.9 million (net of fees and transaction costs) from the issuance of shares to new and existing shareholders at $0.15 per share. This transaction, structured as an institutional share placement followed by a retail share purchase plan, received strong support from new and existing shareholders. It also allowed the Company to welcome a number of new institutional shareholders who share the Company's vision of opportunities in the gas sector and how the Company's CNG Project can deliver long term value.
Capital raised from the Placement and SPP will primarily be used to fund the construction and commissioning of the Company's CNG Facility as part of the Rolleston West Project (ATP 2062). Upon completion, the CNG Facility will allow the Company to sell CNG produced from the Company's Rougemont 2/3 dual lateral well ("Rougemont 2/3") as well as supporting further expansion of that exploration project.
The Company expects to increase daily CNG production from an initial 0.5TJ/day to 1. 5TJ/day through the compression and sale of production testing gas generated from additional exploration wells the Company will drill early in calendar 2024. The Company commenced in-field construction activities for the CNG Facility in October 2023 and remains on-schedule for plant commissioning in December 2023.
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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 program in parallel with permitting for an export pipeline and development facilities to facilitate the fastest possible delivery of gas to market. State Gas' current focus has been to confirm the producibility of the gas through production testing of the wells.