Omega’s Royalty Buyout Boosts Flexibility Amid Critical Canyon Appraisal Phase

Strong Flow Test Validates Canyon Project Potential

Omega Oil and Gas Limited (ASX, OMA) has delivered a compelling update on its Canyon Project in Queensland’s Taroom Trough, reinforcing the prospect of a large and commercially viable oil and gas province in Eastern Australia. The recently completed flow test of the Canyon-1H well yielded promising commercial flow rates of oil and gas, marking a significant milestone for the company’s exploration efforts.

The flow test not only confirmed the presence of hydrocarbons but also revealed a premium quality light crude oil with an API gravity of 49.5. This is notably lighter and cleaner than the international Brent crude benchmark, which typically sits around 38 API, suggesting that Omega’s crude could command a market premium due to its ease of refining and low impurity levels.

Appraisal Advances with Canyon-2 Logging and DFIT Program

Building on the Canyon-1H success, Omega’s appraisal program at the Canyon-2 well, located 15.7 kilometres from Canyon-1H, has further strengthened the project’s outlook. The completion of a high-quality cased-hole logging program has confirmed multiple stacked oil and gas bearing intervals with favourable reservoir properties. Notably, the Canyon-2 sandstone pay interval appears thicker and of higher quality than at Canyon-1, with additional reservoir zones identified that were previously unrecognized.

The ongoing Diagnostic Fracture Injection Test (DFIT) at Canyon-2 is providing critical reservoir pressure and fluid data, essential for refining reservoir models and de-risking the project. These insights are shaping a detailed appraisal plan that includes further seismic acquisition and additional wells, aimed at delineating the full scale and commercial potential of the resource.

Strategic Moves Enhance Commercial Flexibility

In a strategic corporate development, Omega extinguished a legacy production royalty held by TAG Oil, paying US$1 million to remove a 3% gross overriding royalty on future liquids production from its key tenements. This move enhances Omega’s commercial flexibility and value capture potential as it advances towards production.

Financially, the company ended the quarter with $7.83 million in cash, bolstered by a $7.3 million research and development refund received in July, bringing the pro forma cash position to a robust $15.1 million. This strong liquidity position supports ongoing appraisal activities and strategic planning for future development phases.

Looking Ahead, Seismic, Drilling, and Market Pathways

Omega is actively preparing for the next phase of exploration and appraisal, including securing land access for 2D seismic surveys and planning additional appraisal wells. The company is also engaging with domestic and international downstream operators to explore multiple pathways to market for both gas and oil, including trucking crude to local refineries and evaluating pipeline and refining options for longer-term production.

While operations at the Bennett Oilfield remain suspended pending further optimization studies and farm-in discussions, the focus remains firmly on unlocking the full potential of the Canyon Project.