Galilee Energy posted a $5.42 million loss for FY2026 amid heavy investment in its US Zydeco Gas Project and progressing the sale of its Australian Glenaras asset. The company is pivoting to US operations with drilling underway and a $3.5 million placement announced.
- Net loss of $5.42 million driven by US Zydeco drilling and Glenaras costs
- Zydeco-1 well spudded July 2026, sidetrack planned after mechanical issue
- Binding agreement to sell Glenaras Gas Project, retaining 2% royalty
- $3.5 million placement announced to fund Zydeco sidetrack drilling
- Directors appointed in late 2025 to lead US-focused growth strategy
FY2026 Loss Reflects US Pivot and Drilling Investment
Galilee Energy Limited (ASX:GLL) recorded a net loss of $5.42 million for the year ended 30 June 2026, nearly doubling the previous year’s loss of $3.17 million. The widening deficit primarily reflects substantial exploration and drilling expenditures on the newly acquired Zydeco Gas Project in Louisiana, USA, alongside ongoing costs at the Glenaras Gas Project in Queensland, Australia.
Exploration and evaluation expenses surged to $3.89 million, with $2.6 million attributed to Zydeco and $1.29 million to Glenaras. Employee benefits, consulting fees, and software licensing costs also contributed to the increased outflows, underscoring the company’s operational ramp-up in the US.
Zydeco Project: Drilling Commences Amid Technical Challenges
FY2026 marked a strategic pivot for Galilee, with the acquisition of the Zydeco Oil & Gas Project representing its first major US Gulf Coast asset. The project covers 325 acres of mineral leases in Acadia Parish, Louisiana, within a proven gas-condensate fairway. Galilee holds a 100% working interest and 70% net revenue interest.
By the end of June 2026, Galilee had completed site construction and mobilised RFC Drilling Rig 103 to commence drilling. Zydeco-1 well spudded on 1 July 2026, initiating Galilee’s inaugural US drilling campaign. However, drilling was interrupted in early August due to a mechanical issue in the open-hole section, prompting plans for a sidetrack to complete the geological evaluation. This sidetrack has since been expanded to target seven oil and gas intervals, including five newly identified shallow oil prospects, broadening the well’s resource potential significantly.
The Zydeco-1 well targets the Upper and Lower Tweedel formations, with gross unrisked prospective resources estimated at between 4.2 and 13.7 billion cubic feet of gas and 200,000 to 610,000 barrels of condensate, depending on the resource case. The project benefits from proximity to existing infrastructure such as the Texas Gas Pipeline, enabling a relatively straightforward development pathway pending successful drilling results.
Sale of Glenaras Project to Refocus Capital and Management
Post-year-end, Galilee entered into a binding agreement to sell its Glenaras Gas Project subsidiary to Novus Energy Production Company Pty Ltd. Glenaras holds one of the largest uncontracted natural gas resources on Australia’s east coast, located in Queensland’s Galilee Basin. The sale, subject to regulatory and third-party approvals, will transfer operational, environmental, and rehabilitation obligations to Novus.
Galilee will retain a 2% net overriding royalty on Glenaras production and may receive approximately A$1.34 million in cash-backed security deposits plus A$500,000 in deferred consideration. This divestment aligns with Galilee’s strategy to separate longer-dated capital commitments from its focus on near-term, lower-cost US production opportunities, allowing management to concentrate resources on Zydeco and further Gulf Coast growth.
Capital Raising and Leadership Changes Support US Growth
In August 2026, Galilee announced a placement to raise approximately $3.5 million before costs, issuing 777.8 million shares at $0.0045 each with free-attaching listed options exercisable at $0.011. The first tranche raised nearly $937,000, with the second tranche pending shareholder approval. Funds are earmarked to advance the Zydeco-1 sidetrack drilling program, targeting multiple formations including Homeseeker B and Stafford.
The company’s leadership underwent significant refreshment in late 2025, with Eduardo Robaina appointed Non-Executive Chairman, Joseph Graham stepping in as Managing Director and CEO, and Dale Hanna joining as Non-Executive Director and Company Secretary. This new team brings extensive oil and gas experience, particularly in US operations, underpinning Galilee’s shift to a US Gulf Coast growth strategy supported by an experienced US Advisory Board.
Financial Position and Risk Management
Galilee ended FY2026 with $2.2 million in cash and cash equivalents, down from $2.79 million the previous year, reflecting ongoing investment in exploration and development. The company holds significant unused tax losses exceeding $113 million, providing potential future tax benefits.
The auditor issued an unqualified opinion but highlighted material uncertainty regarding Galilee’s ability to continue as a going concern, given its net operating cash outflows and reliance on capital raising and project development to generate cash flow.
Risk management remains a priority, with the company actively addressing operational, environmental, funding, and geopolitical risks. Galilee complies with environmental regulations in both Australia and Louisiana and has provisions for restoration and rehabilitation obligations estimated at $4.92 million.
What’s Next for Galilee Energy?
Investors will be watching closely as Galilee progresses the Zydeco-1 sidetrack drilling and awaits results that will determine the project’s commercial viability. Completion of the Glenaras sale will free up capital and management bandwidth but remains subject to standard conditions. The company’s ability to secure further funding and execute its US Gulf Coast growth strategy will be critical in the coming year.
With drilling underway and a clear strategic focus, Galilee’s transition from an Australian gas explorer to a US-focused oil and gas producer is underway, but the path to sustainable cash flow and profitability remains uncertain.
Bottom Line?
Galilee’s pivot to US operations hinges on Zydeco drilling success and Glenaras sale completion amid ongoing funding needs.
Questions in the middle?
- Will Zydeco-1 sidetrack drilling confirm commercial gas and condensate volumes to underpin production?
- How swiftly will the Glenaras sale complete and what impact will it have on Galilee’s financial flexibility?
- Can Galilee sustain capital raising momentum to fund its US Gulf Coast growth ambitions through FY2027?