Key Petroleum Faces Liquidity Crunch While Awaiting PCA Approvals and Funding
Key Petroleum has submitted eight PCA applications in Queensland and launched a rights issue to raise A$312,225, aiming to fund both domestic development and international expansion despite a cash balance of just A$20,000 at quarter-end.
- Eight PCA applications submitted over ATP 920 and ATP 924, now under assessment
- Non-renounceable pro-rata entitlement offer launched to raise approximately A$312,225
- Cash balance at quarter-end was critically low at A$20,000
- Exploration and evaluation expenditure totaled A$68,000 for the quarter
- New investor committed A$110,000 to support funding
Strategic Progress in Queensland
Key Petroleum Limited continues to focus on advancing its core assets in the Cooper-Eromanga Basin, Queensland. During the March 2025 quarter, the company submitted eight Potential Commercial Area (PCA) applications, four each over ATP 920 and ATP 924. These applications, formally accepted by the Queensland Department of Natural Resources and Mines, are now under assessment, a process expected to take several months.
The PCA applications are a critical step for Key Petroleum, as a successful grant would secure a 15-year window for further appraisal and development. This tenure preservation aligns with the company’s long-term strategy to develop these assets responsibly and capitalize on their strategic proximity to the Carpentaria Gas Pipeline, which connects to the Northern Gas Pipeline, enhancing future commercial prospects.
Financial Position and Capital Raising
Despite these strategic moves, Key Petroleum’s cash position at the end of the quarter was precariously low, with only A$20,000 on hand. To address this liquidity challenge and fund both domestic and international growth initiatives, the company launched a non-renounceable pro-rata entitlement offer in early April 2025. The offer allows eligible shareholders to subscribe for one new share for every five held at A$0.062 per share, targeting a raise of approximately A$312,225 before costs.
Notably, a new investor has already committed A$110,000, providing some confidence in the capital raising effort. The entitlement offer closes on 6 May 2025, with a shortfall facility in place to allow for additional subscriptions beyond initial entitlements. This capital injection is earmarked for acquisition of near-term cashflow assets, regulatory costs related to Queensland tenures, and general working capital.
Exploration and International Ambitions
Key Petroleum’s exploration and evaluation expenditure for the quarter was A$68,000, reflecting ongoing technical work to integrate new data and refine development strategies. Beyond Queensland, the company is actively pursuing selective acquisition opportunities in oil and gas-rich regions outside Australia. This dual approach aims to diversify the resource base and balance risk, targeting assets with attractive near-term cashflow potential and favorable investment frameworks.
While the PCA applications remain under assessment, Key Petroleum is engaging constructively with regulatory authorities to ensure compliance and facilitate timely approvals. The company’s commitment to navigating evolving policy landscapes domestically and internationally underscores its disciplined growth strategy.
Governance and Related Party Payments
During the quarter, Key Petroleum paid A$49,000 to related parties, including directors’ fees, consulting, and corporate administration. These payments are consistent with prior periods and disclosed transparently in the quarterly report. The company’s governance framework remains focused on maintaining operational continuity amid tight financial conditions.
Looking ahead, Key Petroleum’s ability to secure PCA grants and successfully complete its rights issue will be pivotal. The company’s strategic positioning near critical infrastructure and its international ambitions offer potential upside, but execution risks remain given the current liquidity constraints.
Bottom Line?
Key Petroleum’s next moves on PCA approvals and capital raising will be decisive for its survival and growth trajectory.
Questions in the middle?
- Will the Queensland Department grant the PCA applications, and on what timeline?
- Can Key Petroleum fully subscribe its entitlement offer and secure additional funding beyond the committed A$110,000?
- What specific international acquisition targets is Key pursuing, and how will these fit into its portfolio?