Galilee Energy Raises A$3.5 Million for Zydeco-1 Sidetrack and US Growth

Placement Raises A$3.5 Million for Zydeco-1 Sidetrack

Galilee Energy Limited (ASX:GLL) has secured firm commitments to raise A$3.5 million through a placement aimed at funding a sidetrack drilling program at its Zydeco-1 well in Louisiana. The placement involves issuing 777.8 million new shares at A$0.0045 each, accompanied by one free-attaching listed option per share. Directors have also committed to subscribing for $135,000, pending shareholder approval at an upcoming Extraordinary General Meeting in October 2026.

The capital injection will finance the sidetrack designed to test three gas-condensate targets: the primary Upper Tweedel objective, plus the Homeseeker B and the newly identified Stafford intervals. Notably, Stafford has shown standout hydrocarbon indications with gas readings exceeding the rig’s detector upper limit, underscoring its exploration potential.

Sidetrack Strategy and Drilling Efficiency

The sidetrack plan leverages existing well infrastructure, including surface casing, wellhead, and drilling pad, enabling a shorter and more capital-efficient well path. The kick-off point is planned at approximately 2,760 feet measured depth, below which all three exploration targets lie. This approach mitigates prior mechanical issues encountered in the original wellbore, which was interrupted by stuck pipe in the open-hole section.

Galilee’s Managing Director Joseph Graham highlighted that the original wellbore’s geological results have increased confidence in the primary Tweedel target’s location. The sidetrack will re-drill and evaluate Homeseeker B and Stafford before advancing to the Upper and Lower Tweedel objectives, with a total planned depth of around 9,800 feet.

Substantial Prospective Resources at Zydeco-1

The Tweedel targets remain the cornerstone of the project, boasting gross unrisked prospective resources estimated at up to 13.7 billion cubic feet (Bcf) of gas and 610,000 barrels of condensate. Homeseeker B and Stafford have not yet been assigned prospective resource estimates, representing additional upside potential. The sidetrack’s evaluation will determine if these intervals contain commercially viable hydrocarbons.

Located in Acadia Parish, Louisiana, the Zydeco Oil & Gas Project covers 325.3 acres within a proven Gulf Coast gas-condensate fairway, with nearby producing fields such as Indigo and Frey. The project benefits from proximity to existing infrastructure, including a short gas spur line to the Texas Gas Pipeline, facilitating rapid commercialisation if successful.

Strategic Shift with Glenaras Sale

In a significant strategic pivot, Galilee is progressing the proposed sale of its Glenaras Gas Project subsidiary to Novus Energy Production Company Pty Ltd. Completion is subject to regulatory and third-party approvals. This transaction will transfer all future capital, operational, environmental, and rehabilitation obligations for Glenaras to Novus, while Galilee retains a 2% net overriding royalty on Glenaras production and may receive approximately A$1.34 million in cash-backed security deposits plus a deferred payment of A$500,000.

The sale aims to remove competing capital demands and focus Galilee’s resources on its US Gulf Coast growth strategy, centred on Zydeco and near-term production opportunities. This follows the company’s recent sale of Glenaras subsidiary, which freed up capital and management bandwidth.

Use of Funds and Next Steps

Funds from the placement will primarily cover the sidetrack drilling program, including directional drilling, casing, logging, formation pressure testing, and fluid sampling. Additional proceeds will support evaluation of all three gas-condensate targets, contractor and operating costs, general working capital, and placement expenses.

The drilling rig is already on site, with tranche one funds (~A$0.94 million) earmarked to reinstate the rig over the Zydeco-1 well, setting the stage for operational readiness and drilling commencement following shareholder approvals and tranche two funding.

Galilee’s immediate priorities include finalising the sidetrack design, confirming drilling costs and contractor arrangements, and mobilising for drilling. The Board remains committed to advancing Zydeco-1 and will update the market as material developments occur.

Building a Scalable US Gulf Coast Oil and Gas Business

Galilee’s pivot to the US Gulf Coast is underpinned by a strategy focused on low-risk development opportunities, near-term production and cash flow, disciplined capital allocation, and repeatable growth through reinvestment and acquisition. The company benefits from an experienced US Advisory Board that has facilitated rapid progress from acquisition to drilling and continues to support opportunity sourcing and evaluation.

The Zydeco project represents the foundation asset for this strategy, with the sidetrack evaluation critical to unlocking its commercial potential. Success here could position Galilee to capitalise on the region’s infrastructure and market dynamics, aiming for a swift transition to production.