Walk Through ASX-Listed Real Energy’s (RLE) Action-Packed FY20 & Subsequent Developments

Summary

  • Gas company focused on the Eastern Australian region, Real Energy has released its report for the 12-month period ended 30 June 2020.
  • Through the reporting period, in the Cooper-Eromanga and Surat basins, the Company was actively engaged in gas exploration, evaluation as well as development activities.
  • Subsequent to the reporting period, Real Energy announced a Scheme Implementation Agreement (SIA) with Strata-X Energy to merge the companies to form Pure Energy.
  • Developments have been fostering well at Pure Energy, while the Company remains focused on expanding its business through organic growth.

Real Energy Corporation Limited (ASX:RLE) is an evaluator, explorer and developer of oil & gas (O&G) projects. The Company has interests in Australia’s Cooper Basin and Surat Basin.

The Company holds 100 per cent ownership in two huge permits, ATP1194PA and ATP 927P, in Queensland. Besides, it has an equal joint venture (JV) with Strata X Energy Limited (ASX:SXA) to develop the ATP2051 permit as a Coal Seam Gas (CSG) project. The project stretches over an area of 154 square kilometres in the Surat Basin.

Through the financial year 2020 (FY20), Real Energy was actively involved in gas exploration, evaluation, and development of its wholly owned permits (ATP927 and ATP1194PA) and 50 per cent owned ATP2051P. The Company also advanced on its hydrogen initiatives.

Significant FY20 Developments

ATP2051 Progress

Covering 154km², the ATP2051 acreage was granted to the joint venture between the Company and Strata-X to pursue CSG– Project Venus. Besides, independent assessment by MHA Petroleum Consultants of Project Venus offered the best estimate for Prospective Gas Resources of 694 PJ.

The highly prospective Walloon CSG area is encircled by key CSG-producing assets. This allows the joint venture to accelerate the progressive conversion of gas resources to gas reserves, with the ultimate goal being ramping up the development for potential cash inflows.

The JV has been undertaking the initiative to begin operations on Project Venus. Drilling of Venus 1 well is scheduled for next month, in October 2020.

ATP927 Progress

Permit ATP927 has been extended to 30 September 2023. This enables RLE to advance its endeavours concerning the Windorah Gas Project’s exploration and development.

Hydrogen Initiative Progress

Hydrogen is a high-energy fuel that can be burned with no CO2 emissions. Industry experts opine that the hydrogen industry may grow rapidly, catalysed by credible hydrogen usage in the transport and power industries. So much so, Australia’s Federal Government remains committed to developing this industry.

Real Energy appropriately timed its investment and commitment towards envisioning low emissions hydrogen transition to renewables. Consequently, the Company established a wholly owned subsidiary, Pure Hydrogen Corporation Pty Ltd. This move was consistent with the strategy of building a multi-faceted energy business centred on the Queensland market.

ALSO READ: Real Energy’s Hydrogen Focus

Financial Footing & Way Forward

As on 30 June 2020, Real Energy had current assets worth $ 1.7 million including $ 1.6 million in cash.

The Company’s focus is likely to remain on expanding the business through organic growth. Real Energy seems to be on the right trajectory, as developments have continued subsequent to the quarter, the most significant being the SIA with Strata-X Energy to merge the companies to Pure Energy.

Pure Energy- A Compelling Opportunity To Create A Material Gas Business

In July 2020, Real Energy and Strata-X Energy announced that they intend to merge and form Pure Energy. Post the merger, the Company will own 100 per cent of Project Venus.

MUST READ: Underscoring Pure Energy

Venus-1 Progress- First Pilot Well For Project Venus

The first pilot well for Project Venus, Venus-1 will be drilled in October 2020. The primary target is Walloon Subgroup Coal Measures followed by Permo-Triassic pervasive gas play.

After reservoir enhancement, Venus-1 is likely to be set up as the first CSG pilot well for long term testing purposes. The target would be on commercial gas flows that may facilitate predictable conversion of the prospective 694 PJ gas resources in ATP2051 into reserves. This indicates a good potential for early cash inflows.

ALSO READ: Real Energy to Drill Venus-1 CSG Well

Recent Placement

Subsequent to the reporting period, the Company met another milestone, besides the SIA with Strata-X. On 21 September 2020, Real Energy raised $800,000 via a share placement. Funds will support the drilling and testing of Venus-1, together with working capital.

RLE traded at $ 0.023 on 8 October 2020 (AEST 01:05 PM).

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