3D Energi has confirmed two significant gas discoveries in the Otway Basin but now confronts a funding shortfall that has led to a trading suspension on the ASX.
- Two gas discoveries at Essington-1 and Charlemont-1 wells
- Drilling costs significantly exceeded initial estimates
- Outstanding cash calls of approximately US$2.5 million with further US$5.3 million due soon
- Default notice issued by joint venture operator
- Trading of 3D Energi shares suspended pending funding resolution
Significant Discoveries Amid Operational Challenges
3D Energi Limited has announced promising results from its Otway Phase 1 drilling program within the VIC/P79 exploration permit, confirming two gas discoveries at the Essington-1 and Charlemont-1 wells. These findings extend the known Otway gas fairway and mark the first gas discovery in the basin since 2021. The discoveries, located near existing infrastructure, show encouraging gas composition with low CO₂ content and potential associated liquids, which could support future commercial development.
Cost Overruns and Funding Shortfall
However, the drilling program has encountered significant cost overruns. The total well costs have materially exceeded pre-drill estimates due to extensive wireline logging and formation testing at Essington-1, as well as weather delays and complex well conditions at Charlemont-1. These factors extended the drilling duration and increased operational expenses beyond initial forecasts.
As a result, 3D Energi faces outstanding cash calls of approximately US$2.5 million, which it currently cannot meet. An additional US$5.3 million in payments is due shortly, raising concerns about the company’s ability to maintain its 20% participating interest in the permit. The joint venture operator has issued a default notice with a remedy period, and failure to meet these obligations could trigger dilution or buy-out mechanisms under the joint operating agreement.
Trading Suspension and Next Steps
In response to these financial pressures, 3D Energi has suspended trading of its shares on the ASX while it addresses its funding position and the implications of potential default. The company is currently undertaking detailed post-well analysis to integrate the data collected and inform future technical and commercial assessments. Further updates are expected as 3D Energi navigates this critical juncture.
The Otway Basin remains a strategically important region for Australia's east coast gas supply, with infrastructure-adjacent discoveries offering potentially shorter development pathways. The outcome of 3D Energi’s funding challenges and subsequent appraisal activities will be closely watched by investors and industry observers alike.
Bottom Line?
3D Energi’s promising discoveries are overshadowed by urgent funding challenges that will shape its future stake in the Otway Basin.
Questions in the middle?
- Will 3D Energi secure the necessary funding to avoid dilution or loss of interest?
- How will the joint venture partners respond to the default notice and funding shortfall?
- What timeline can investors expect for commercial appraisal and development decisions?