Company Update and Security Purchase Plan
Company Update and Security Purchase Plan
Brisbane, Feb 28, 2019 AEST (ABN Newswire) - State Gas Limited (ASX:GAS) (GAS) is pleased to offer eligible securityholders the opportunity to participate in a Security Purchase Plan, allowing you to potentially contribute up to A$15,000 in applying for fully paid ordinary securities in GAS.

The following are attached to this announcement:

a) Security Purchase Plan offer documents including the Chairman's Letter and the terms and conditions of the offer; and

b) An application form for securityholders to participate in the Security Purchase Plan.

These documents (attached) (see link below) are in the process of being sent out to securityholders and are expected to be received shortly.

The offer opens on Monday, 4 March 2019.

COMPANY UPDATE

Successful 2018 Drilling Program

During October to December 2018, the Company successfully undertook drilling of two wells at the Reid's Dome Gas Project (PL 231): Primero West-1 in the northern area of the permit to test the Cattle Creek Formation in accordance with the terms of the Reid's Dome Joint Operating Agreement (JOA), and Nyanda-4 to investigate the gas potential of both the tight gas sands and Permian coal seams within the Reid's Dome Beds.

Primero West-1 - Successful Gas Well

The Primero West-1 well encountered the "Primero" gas sand in the Cattle Creek Formation from 131.5m depth, in line with expectations. Analysis of wireline logs has indicated a net gas-bearing zone of up to 12.5m.

Flow testing and sampling activities measured a maximum gas flow rate of 0.436 mmscf/d through a 48/64" choke, in line with expectations. Laboratory analysis has confirmed the gas composition to be 96.7% methane, a result similar to offset well data.

Nyanda-4 - Successful Gas Well

Following completion of drilling of the Primero West-1 well Silver City Rig 25 commenced drilling the Nyanda-4 corehole to test the gas potential of the Reid's Dome coals and sandstone reservoirs. Nyanda-4 is located approximately 13.5km south of the Primero West-1 well and 50m southwest of Nyanda-1 (drilled in 1987).

Prior to the drilling of Nyanda-4, Reid's Dome had not been tested as a coal seam gas target.

The Nyanda-4 well was drilled to a total depth (TD) of 1,200m and approximately 150m of core was obtained, commencing at 392m depth. Gas was observed bubbling from the coal and hissing from sandstones in Nyanda-4 cores. Numerous gas shows were seen in the logs, associated with both coals and sandstones.

Analysis has confirmed 40.4m of net coal in seams up to 4m thick, and a further 25m of carbonaceous shales and thinner coal seams (i.e. <0.3m), indicating 65m of coals and carbonaceous shales (excluding conventional sandstones). Correlation with AOE-1, located approximately 14 km north of Nyanda-4 within PL 231, supports the expectation of additional coals below TD of 1200m.

After 7 weeks' desorption the average gas content from cored samples is 11.6 m3/t, with gas content increasing with ongoing desorption in the laboratory. Gas content for the thickest seams was ~13 m3/t and still increasing with desorption time.

Gas samples taken during December from coal seams within the cored zone of Nyanda-4 returned a weighted-average of 80% methane, while gas samples sourced from the Nyanda-4 wellhead at surface during February returned an average of 99.8% methane.

The success of the Nyanda-4 CSG/conventional gas well has confirmed a significant new CSG project at Reid's Dome, with further potential for significant conventional gas, which has resulted in an important corporate juncture for State Gas.

Move to 100%-ownership of Reid's Dome (PL 231)

At commencement of the 2018 drilling program, State Gas held a 60% Participating Interest in PL 231 and the associated Joint Venture. On 27 November 2018, State Gas entered into an agreement to acquire a further 20% interest in the permit and Reid's Dome Joint Venture, taking its interest to 80% with the Joint Operating Agreement continuing in full force and effect. This transfer was registered by the Queensland Department of Natural Resources, Mines and Energy on 4 January 2019, recording an 80% Participating Interest in PL 231 in the name of State Gas.

In addition, in early December 2018 State Gas elected under the provisions of the JOA for the Joint Venture to acquire the remaining 20% and increase its interest in PL 231 to 100%. Offer/Acceptance Notices were issued under the JOA on 4 December, and the remaining 20% holder failed to complete the transfer by the settlement date in accordance with the requirements of the JOA. On 8 February, State Gas commenced proceedings in the Supreme Court of Queensland seeking specific performance of the transfer of the remaining 20% under the terms of the JOA.

Corporate Activities

As announced to the ASX during February 2019, the Company has received approaches and interest from a number of parties to progress the Reid's Dome Gas Project in both partnering (asset-level) and corporate (company-level) transactions. In line with the Board's aim to ensure that discussions include all qualified and interested counterparties, State Gas has appointed leading independent M&A/Advisory firm Highbury Partnership as financial advisor to help it assess and respond to inquiries from interested parties. Highbury Partnership and its principals have advised and financed a wide range of oil & gas clients over many years. Presentations, discussions and Q&As are continuing with parties under confidentiality arrangements.

On 27 February 2019, State Gas announced that it had undertaken a private placement to sophisticated investors raising $500,000. The placement is being conducted at a price of $0.85 per Ordinary Share, with settlement occurring on or before Wednesday, 6 March 2019.

The SPP combined with the placement funds will provide further resources for the important corporate initiatives currently underway during the remainder of FY2019.

To view the release and figures, please visit:
http://abnnewswire.net/lnk/CQCU2YR2


About State Gas Limited

State Gas Limited ASX:GASState Gas Limited (ASX:GAS) is a Queensland-based developer of the Reid's Dome gas field (PL 231), which includes both CSG and conventional gas, originally discovered in 1954 during oil drilling prior to the existence of a pipeline network and an east coast gas market. The Reid's Dome field is located in the Bowen Basin in Central Queensland on the apex of the Springsure-Sericold Anticline. State Gas is sole Operator of PL 231, which is well-located 30 kilometres southwest of Rolleston, approximately 47 kilometres from the Queensland Gas Pipeline.

http://www.stategas.com

 


Contact

Lucy Snelling
Chief Executive Officer
M: +61-439-608-241
E: lucy@stategas.com

Greg Baynton
Executive Director
M: +61-414-970-566
E: greg@stategas.com



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