State Gas Limited has independently certified a maiden 2P gas reserve of 30.2 PJ at its Rolleston West Project, underpinning plans for a 10TJ/day gas development. The company also raised $3.2 million through convertible notes to accelerate pre-development activities.
- Maiden 2P gas reserve of 30.2 PJ certified for Rolleston West
- Reserve supports a 10TJ/day pipeline-connected gas project with expansion potential
- Raised $3.2 million via unsecured convertible notes at a 33% premium
- Advancing engineering studies, regulatory approvals, and commercial negotiations
- Ongoing land access dispute remains unresolved, legal proceedings underway
Maiden Reserve Certification Marks a Milestone
State Gas Limited (ASX, GAS) has announced a significant advancement in its Rolleston West Project with the independent certification of a maiden proven plus probable (2P) gas reserve of 30.2 petajoules (PJ). This certification, conducted by internationally recognised consultancy Netherland, Sewell & Associates, Inc (NSAI), is based on data from just four wells and extended production testing in central Queensland's Bowen Basin.
The 30.2 PJ reserve establishes a solid foundation for developing a coal seam gas project capable of delivering 10 terajoules per day (TJ/day) of pipeline-quality gas. This volume is sufficient to support a long-life gas operation with significant potential for expansion, positioning State Gas to engage strategically with gas consumers, infrastructure investors, and financiers.
Capital Raise Strengthens Financial Position
Complementing the reserve certification, State Gas successfully raised $3.2 million through the issue of unsecured convertible notes at a 33% premium to the closing share price. This capital injection provides immediate liquidity to accelerate pre-development activities, including detailed engineering, environmental approvals, and commercial negotiations for gas sales and infrastructure partnerships.
The convertible notes feature a conversion price of 4 cents per share initially, with options exercisable at 5 cents, reflecting investor confidence in the intrinsic value of State Gas’s assets following the reserve announcement. This funding approach offers a less dilutive alternative to traditional equity placements, preserving shareholder value while enabling progress.
Advancing Project Development Amid Challenges
State Gas is actively advancing concept and pre-FEED/FEED studies for gas processing and pipeline infrastructure to connect Rolleston West to the Gladstone/Wallumbilla network. The company is also pursuing environmental and regulatory approvals necessary to secure a petroleum lease for project development.
Commercial discussions are underway with potential domestic and international gas off-takers, including industrial users and power generators seeking medium to long-term supply. Additionally, State Gas is exploring co-investment partnerships to support the project's long-term development and infrastructure financing opportunities.
However, the company faces an ongoing land access dispute dating back to September 2024, which remains unresolved despite mediation efforts. Both parties have initiated legal proceedings in the Land Court of Queensland. State Gas emphasises its commitment to cooperative engagement with landowners but is prepared to enforce access rights to protect shareholder interests and project viability.
Synergies and Innovation in Gas Commercialisation
Beyond Rolleston West, State Gas continues to promote its proprietary HDNG® technology as a diesel alternative for mining and industrial users in the Bowen Basin. This technology offers environmental benefits and cost savings by substituting diesel with compressed natural gas, addressing a market with over $2 billion annual diesel consumption.
The company also highlights synergies between Rolleston West and its Reid’s Dome Project, exploring integrated development strategies that leverage shared infrastructure and virtual pipeline solutions to commercialise both conventional and coal seam gas resources.
Financial Management and Outlook
State Gas operates with a reduced cost structure and continues to manage its capital prudently. The company awaits delayed R&D grant payments related to its HDNG plant development, which will further improve liquidity upon receipt. Directors have deferred remuneration to support financial discipline.
Looking ahead, State Gas aims to solidify commercial frameworks, secure financing, and resolve land access issues to accelerate Rolleston West’s development. With a strengthened balance sheet and a clear strategic focus, the company is well-positioned to capitalise on growing demand for natural gas in Australia’s east coast energy markets.
Bottom Line?
With a certified reserve and fresh capital, State Gas is poised to turn potential into production, but legal and funding hurdles remain.
Questions in the middle?
- How will the ongoing land access dispute impact project timelines and costs?
- What progress will State Gas make in securing long-term gas sales agreements?
- Can the company successfully attract co-investment partners to support infrastructure development?