3D Energi has confirmed a second gas discovery offshore Otway Basin while facing financial strain from joint venture cash calls, triggering default notices and a buy-out offer from ConocoPhillips.
- Second gas discovery at Charlemont-1 in Otway Basin
- Joint venture cash calls total approximately US$7.7 million
- ConocoPhillips initiates buy-out process for 20% VIC/P79 stake
- Seismic surveys and geological studies advance in Bedout Sub-basin
- Company holds A$3.56 million cash with limited funding runway
Second Gas Discovery Reinforces Otway Basin Potential
3D Energi Limited (ASX:TDO) has added a second gas discovery to its tally in the offshore Otway Basin with the Charlemont-1 well intersecting gas across multiple Waarre reservoirs. This follows the earlier Essington gas find and confirms the prospectivity of the Charlemont Cluster, a chain of prospects sharing similar geophysical signatures to the nearby La Bella gas discovery. The well encountered higher-than-anticipated pressures, requiring modifications to the well design, including a 7-inch liner installation and adjustments to formation evaluation.
This discovery supports the company’s infrastructure-led exploration strategy in the Otway Basin, which holds the largest exploration position in Bass Strait with VIC/P79 and T/49P permits covering 7,265 km² adjacent to major producing gas fields. The Charlemont-1 success builds on the earlier Essington-1 discovery, which was the first Otway Basin gas find since 2021, underscoring the working petroleum system and encouraging further exploration in the region. The company’s recent update on the Charlemont-1 well follows its prior announcements detailing gas presence and petrophysical evaluations across the Waarre reservoirs, with ongoing analysis to refine resource estimates. This progress was highlighted in previous reports on the Otway Phase 1 Drilling Program, including the challenges posed by elevated well pressures and the installation of additional well infrastructure to manage them. The company’s exploration efforts here are part of a broader push to unlock local gas supplies for Australia's east coast, a theme consistent with its earlier two key Otway Basin gas discoveries and major Otway Basin gas discoveries.
Bedout Sub-basin Seismic Survey Advances Amid Regulatory Hurdles
On Australia’s west coast, 3D Energi continues to push forward with its 100% owned WA-527-P permit in the offshore Bedout Sub-basin. The company is planning the Sauropod 3D seismic survey, a critical step to image potential Dorado-style incised valleys and identify drillable prospects along the basin margin. These features, identified on reprocessed 2D seismic, could form large hydrocarbon traps analogous to nearby major discoveries such as Dorado and Pavo.
The environmental plan for the Sauropod survey was updated and submitted to NOPSEMA in October 2025, but the regulator has requested modifications, which the company’s contractor Viridien Australia is addressing. Additionally, 3D Energi has applied for a two-year Suspension, Extension and Variation of its work commitments, proposing to undertake 2D seismic inversion and high-resolution stratigraphic mapping to leverage insights from the Keraudren 3D seismic dataset and recent Apus/Pavo wells. This integration aims to refine exploration concepts and reduce geological risk, enhancing confidence in reservoir and seal presence across permit boundaries.
Financial Strain Spurs Buy-Out Offer and Reporting Delays
Despite encouraging exploration results, 3D Energi faces significant financial pressure stemming from joint venture cash calls totaling approximately US$7.7 million related to the Otway Phase 1 Drilling Program. The company has received first and second default notices from the joint venture operator, ConocoPhillips Australia, due to these unpaid calls. Subsequently, ConocoPhillips SH2 Pty Ltd issued a buy-out notice to acquire 3D Energi’s 20% interest in VIC/P79 at fair market value under the Joint Operating Agreement.
The buy-out process allows for either mutual agreement on valuation or expert determination, followed by a 30-day window for ConocoPhillips to exercise its buy-out right. If the buy-out is not exercised, ConocoPhillips and Korea National Oil Corporation may pursue other remedies, including dilution of 3D Energi’s participating interest. The company’s financial position is further strained by a delay in lodging its half-year financial report, attributed to the ongoing buy-out and default issues. This delay maintains the suspension of 3D Energi’s securities from ASX quotation until the report is finalized.
As at 31 March 2026, 3D Energi held cash and cash equivalents of approximately A$3.56 million, down from nearly A$14 million at the prior quarter’s start. The company recorded net operating cash inflows of A$716,000, buoyed by a GST refund, but investing activities, mainly exploration expenditure, resulted in outflows of nearly A$11 million during the quarter. The company acknowledges that its current funding runway covers less than half a quarter of operations at current expenditure rates. To address this, 3D Energi retains full placement capacity under ASX Listing Rules and is actively managing the buy-out process as a potential source of liquidity. These financial challenges echo the company’s earlier funding issues that led to its ASX suspension and capital raising efforts, including the issuance of free attaching options to investors in late 2025. The evolving funding situation is a critical factor for investors considering the company’s exploration upside versus financial risks, as detailed in prior coverage of the potential buy-out of VIC/P79 stake and suspension amid funding uncertainties.
Gas Storage Project and Corporate Governance
Onshore, 3D Energi’s GSEL 759 permit near Mount Gambier in South Australia remains in a development phase for gas storage, with ongoing reservoir and seal studies but no significant updates this quarter. The company continues to evaluate this project’s economic potential as part of its diversified Australian portfolio.
Corporate governance disclosures note payments to related parties totaling A$116,000 for director and associated salaries and fees during the quarter. The company reiterates its commitment to continuous disclosure and will provide further market updates as developments unfold.
Bottom Line?
3D Energi’s second Otway gas discovery highlights exploration promise, but looming buy-out and funding shortfalls cast uncertainty over its near-term future.
Questions in the middle?
- Will ConocoPhillips exercise its buy-out right or will 3D Energi retain its VIC/P79 stake?
- How will the company fund ongoing exploration and operational costs with limited cash reserves?
- What impact will delays in the half-year financial report have on investor confidence and ASX reinstatement?