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The Brisbane-based State Gas Limited (ASX:GAS) is engaged in the exploration and development of gas fields in Australia. Its key project, to date, is the Reidâs Dome Gas Project with the PL 231 permit situated in the Bowen Basin in Central Queensland.
On March 13th, the company released a presentation providing several updates including its recent activities. According to the information provided, the Reidâs Dome Gas Project covers around 181 km2 with the PL-231 license granted for a term of 30 years from December 15th, 2012 and the pipeline survey license PSL-2028 stands valid for a two-year term from August 1st, 2018.
State Gas holds 80% working interest in the project, and currently transitioning to obtain 100% ownership. The project has proven gas flows, sandstone reservoirs in the Cattle Creek Formation and Reid's Dome Beds, with 17 wells drilled since 1954-2018. #
On February 28th, the company announced a Security Purchase Plan, whereby the eligible shareholders would be allowed to contribute up to AUD 15K in applying for fully paid ordinary securities in GAS. The offer opened on February 4th, 2019 and follows a private placement of $ 500,000 from sophisticated investors at a price of $ 0.85 per ordinary share on February 27th, 2019. The capital raised will be utilised for additional legal expenses in the transition to 100% ownership of Reidâs Dome Gas Project as Dome Petroleum Resources Plc transfer the remaining 20%, costs arising from the increase in interest in PL-231, and also as further working aid.
Back in early February 2019, the company announced the appointment of the leading independent M&A/Advisory firm Highbury Partnership as its financial advisor.
During the quarter ended December 31st, 2018, the New South Wales-based Silver City Drilling Pty Ltd successfully conducted drilling of two wells at the flagship project site comprising Primero West-1 in the northern area of the permit to test the Cattle Creek Formation and Nyanda-4 for investigating the gas potential of both the tight gas sands and Permian coal seams within the Reidâs Dome Beds. Besides, the company also increased its participating interest in PL-231 from 60% to 80%.
At the end of the concerned quarter, the net cash and cash equivalents amounted to ~AUD 1.35 million. There were major outflows from operating activities at around AUD 2.40 million arising from expenses in exploration, evaluation, staff and corporate costs. The investing activates further added AUD 311k to the net cash outflows due to the acquisition of tenements.
Going forward, State Gas plans to finalise the analytical laboratory data from 2018 drilling program and also attain 100% ownership of PL 231. The Offer/Acceptance notices for the remaining 20% were issued in December 2018, and the company shall continue negotiating with the interested parties about the possible transactions. In the process, State Gas will also evaluate the available risk/return-based outcomes for its shareholders.
State Gas has a market cap of AUD 112.38 million with ~ 135.4 million outstanding shares. At the end of the trading session on March 13th, the GAS stock price closed at AUD 0.850, up 2.41%.
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