Omega’s Canyon wells reveal a bigger Taroom Trough opportunity

Canyon appraisal delivers its strongest evidence yet

Omega Oil & Gas Limited (ASX:OMA) has strengthened its case for a large, stacked petroleum system in Queensland’s Taroom Trough, after two appraisal wells produced results that exceeded the company’s expectations. Canyon-3 intersected 526 metres of gross oil and gas-bearing Permian interval with 170 metres of aggregate net pay across six stacked reservoirs, while Canyon-4 later recorded the program’s highest net pay at 197 metres across 589 metres of gross hydrocarbon-bearing interval.

The Canyon-3 result improved the quality of the key Canyon Sandstone interval relative to Canyon-1. It contained 18 metres of net oil-bearing sands at average porosity of 11.5%, compared with 12 metres at 7.4% in Canyon-1, where oil and gas had flowed to surface. The well also identified the Lower Kianga Sandstone as a further gas and condensate-bearing interval, adding another target to Omega’s appraisal thesis.

Canyon-4 confirms another oil-bearing reservoir

Canyon-4, drilled about 8 kilometres south of Canyon-3, delivered the best result reported in the appraisal program so far. Its Canyon Sandstone contained 11 metres of net pay at 12.1% average porosity, the strongest Canyon Sandstone reservoir quality recorded by Omega to date. The Lower Kianga Sandstone was also confirmed as a significant oil-bearing reservoir at 10.7% average porosity.

The well produced 111.2 metres of core across three key reservoir intervals, which Omega said would be used to assess their reservoir properties. The result follows the earlier Canyon-4 drilling campaign, which formed part of the company’s largest appraisal program and targeted continuity across the stacked Permian sequence. These findings remain appraisal results rather than proof of commercial production: Omega says it still needs to complete horizontal drilling, fracture stimulation and flow testing to establish repeatable commercial flow rates.

Acreage expansion gives Omega a larger operated footprint

Omega’s exploration inventory also grew during the quarter. ATP 2082, covering 1,138 square kilometres, was formally granted after the Omega-led joint venture was selected as preferred tenderer in September. Omega holds a 45% interest and operatorship, alongside Tri-Star at 30% and Beach Energy at 25%.

The award lifts Omega’s operated Taroom Trough acreage by 63% to 2,976 square kilometres. The company interprets ATP 2082 as containing a continuation of the stacked Permian reservoir sequence identified in the Canyon wells, although that interpretation remains to be tested through future appraisal. Two northern wells, Canyon North-1 and Canyon North-2, are being prepared in ATP 2081, with timing and locations subject to land access, well results and joint venture approval.

Cash position supports the next testing phase

Omega finished September with $92.9 million in cash and no debt, down from $102.1 million three months earlier. The $9.2 million decline primarily reflected Canyon-3 drilling and evaluation and the commencement of Canyon-4. The Appendix 5B reported $8.0 million of exploration and evaluation expenditure during the quarter, while Omega said both wells were completed safely and within budget.

On the company’s reported cash-flow measure, the balance represents 10.4 quarters of funding based on quarterly relevant outgoings. Omega says this leaves it more than fully funded for the 2026/27 appraisal program, including fracture stimulation and flow testing, with further headroom beyond the base program and a potential FY2027 research and development tax incentive refund. Its current petroleum reserves estimate remains nil, while contingent resources are stated at 0.4-1.7-4.5 trillion cubic feet across the 1C, 2C and 3C categories and have not been adjusted for risk.