Can Omega Deliver on Promising Canyon Reservoir Amid Market Risks?

Strong Capital Position Fuels Next Growth Phase

Omega Oil and Gas Limited (ASX, OMA) closed the September quarter with a robust $46 million equity placement, significantly strengthening its financial position. Combined with existing cash and expected R&D tax refunds, the company anticipates having over $70 million available to fund an extensive appraisal program starting in the second quarter of 2026. This capital injection was well supported by existing cornerstone shareholders and attracted new institutional investors both domestically and internationally, underscoring confidence in Omega’s strategic direction.

Reservoir Modelling Confirms Commercial Viability

Independent reservoir modelling conducted by SLB (formerly Schlumberger) has validated the commercial potential of Omega’s Canyon Project in Queensland’s Taroom Trough. The model estimates an impressive 10-year Estimated Ultimate Recovery (EUR) of approximately 0.95 million barrels of oil equivalent (MMBOE) per 2,000-meter horizontal well, spaced at 1,000 meters. This translates to an estimated revenue of $93 million per well based on current commodity price assumptions. With 1,075 square kilometers of Potentially Commercial Areas (PCAs), Omega’s acreage could accommodate up to 418 such wells, highlighting the scale of the opportunity.

Positive Reservoir Pressure Supports Production Outlook

Complementing the modelling, a multi-stage Diagnostic Fracture Injection Test (DFIT) in the Canyon-2 well confirmed high overpressure within the Canyon Sandstone reservoir. High reservoir pressure is a critical factor that can drive strong production flow rates, a characteristic shared by successful unconventional oil and gas plays globally. The DFIT results, consistent with previous tests, enhance confidence in the reservoir’s ability to deliver commercial production rates.

Strategic Partnerships and Future Drilling Plans

Omega has formalized an Area of Mutual Interest (AMI) agreement with cornerstone shareholder Tri-Star and Beach Energy to jointly pursue new exploration acreage in the Taroom Trough, expanding the company’s footprint beyond the Canyon Project. Meanwhile, the upcoming 2026 appraisal program will focus on drilling multiple vertical wells with planned horizontal sections to delineate reservoir extent, quality, and flow potential across five prospective reservoir layers. The company aims to mature resources into reserves by the second half of 2026, with rig contracts expected to be finalized by year-end.

Operational and Financial Highlights

While operations at the Bennett oilfield remain suspended pending optimization studies and potential farm-in partnerships, Omega’s balance sheet is further bolstered by a $7.3 million refundable R&D tax offset received during the quarter. The company ended September with $39.6 million in cash, positioning it well to execute its ambitious development plans. CEO Trevor Brown emphasized the alignment of Omega’s strategy with Queensland’s 2025 Energy Roadmap, highlighting the importance of securing domestic gas supply for power generation.