State Gas shares surge after securing A$5.5M exploration grant

State Gas Ltd (ASX: GAS) shares surged ~33% higher intra-day to A$0.16 after securing A$5.5 million of exploration grant funding.

The grant was awarded through the Queensland Government’s Frontier Gas Exploration Program.

State Gas will use the funds to further delineate gas resources and reserves within the company’s Rolleston West coal seam gas (CSG) project by drilling two new vertical wells.

Unique alternative to flaring

A key aspect of State Gas’ successful grant application is that through applying the company’s compression and virtual pipeline assets, production testing gas from new wells can be captured instead of flared.

This unique capability was essential in satisfying the assessment criteria for the grant, in particular, being able to rapidly deliver new gas supply to Queensland and the East Coast domestic market.

279 petajoules gas resource

State Gas’ exploration permit ATP-2062 is about 35 kilometres west of the Queensland Gas Pipeline (QGP).

The acreage lies within an area known as the Denison Trough which contains Late Permian Bandanna formations.

Rolleston West Project Location within ATP 2062.

The seams within the Bandanna coal measures can be correlated for many kilometres.

Gas content is generally consistent throughout, ranging from 4.5 – 6.5 cubic metre/tonne with a composition greater than 92% methane.

State Gas has already established 279 petajoules of gas (contingent resources) within the project area.

Successful production testing

The company has successfully drilled, cored and logged two vertical and one dual-lateral exploration well.

The production testing achieved a stabilised flow rate of 474,000 cubic feet of gas per day.

With the support of grant funding, the company intends to drill two new vertical wells.

Importantly, the two wells are in an area that has proven gas content and commercial productivity.

The wells are designed to intersect the entire Bandanna Formation coal measures and will have the ability to produce from all the permeable seams.

Strong endorsement for the project

State Gas Executive Chairman Richard Cottee said: “Qualifying for this exploration grant funding is a strong endorsement for the Rolleston West Project and the Company.

“It demonstrates that the Queensland Government shares State Gas’ view that the area is highly prospective and capable of supporting new gas project development.”



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