Quarterly Activities Report
Brisbane, Oct 31, 2025 AEST (ABN Newswire) - State Gas Limited (
ASX:GAS) (STGSF:OTCMKTS) released this update for the quarter ending 30 September 2025 ("the Quarter"). During the period, State Gas focused on three priorities: supporting the process for Independent Certification of a maiden 2P Reserve for the Rolleston West Project ("Rolleston West"), progressing applications for permanent tenure and a pipeline connection to support development of Rolleston West and engagement with potential customers for the Company's High Density Natural Gas ("HDNG") product.
HIGHLIGHTS:
- Maiden 2P Reserve Certification at Rolleston West (ATP 2062) is well advanced with independent certifier
- Discussions progressing with prospective HDNG customers
- Investigations into options for monetizing PL231 (Reid's Dome) conventional gas discoveries
- Capital and cash flow management and planning activities
The Company's field activities during the quarter were restricted in order to preserve capital, and in anticipation of the maiden Reserve Certification at Rolleston West.
Exploration Activities
Positive drilling and testing results from the two recently completed exploration wells at the Rolleston West Project reinforce the Company's hypothesis that there is a large body of high-quality coal seam gas ("CSG") that demonstrates good permeability and is continuous across many square kilometres within the Rolleston West area on the eastern side of ATP 2062.
Production testing results from these two new wells are enabling State Gas to improve certainty around gas flow rate and composition, supplementing its existing knowledge from the Rougemont 2/3 dual lateral well system.
The Company has commenced evaluating a variety of development options for the project and intends to undertake a Concept Study in the first quarter of next calendar year to provide more granular project definition and development costs. The Company has also commenced planning baseline environmental monitoring studies within the project area which is the critical aspect of securing long term production tenure.
In parallel with these activities, State Gas is working towards the connection of the two new exploration wells to its HDNG plant to enable it to capture and treat production testing gas and support the expansion of its alternative fuels supply strategy to the coal industry and other industrial users seeking to diversify away from diesel and reduce carbon emissions.
Progress toward establishing a maiden 2P reserve
Data from the two new wells exploration wells, in conjunction with historical production data from the Rougemont 2/3 dual lateral well system, will enable State Gas to establish a maiden 2P reserve for Rolleston West. During the quarter the Company supported Netherland, Sewell & Associates Incorporated ("NSAI") in conducting its independent reserve and resource certification process for Rolleston West. State Gas' successful commercialisation of CSG within the Rolleston West area using its HDNG technology has enabled the demonstration of the commercial viability of gas from this CSG field much earlier in the exploration/appraisal process than otherwise.
Establishment of an independently accredited 2P reserve estimate for the Project will:
1. Independently verify a volume of commercially recoverable coal seam gas ("CSG") sufficient to underpin long term project economics;
2. Support the Company's application for a petroleum lease over a substantial portion of ATP 2062;
3. Allow State Gas to begin to negotiate access to pipeline infrastructure which can connect the Project to the Gladstone to Wallumbilla pipeline network; and
4. Enable the Company to pursue financing solutions to progress the Project with gas users and project coinvestors.
The Certification work with NSAI is reaching a conclusion and State Gas looks forward to announcing a maiden 2P reserve in the coming quarter.
HDNG Operation
State Gas' first-of-its-kind HDNG plant at Rolleston West was commissioned in mid-2024 and successfully demonstrated the potential of this technology through the successful provision of compressed gas to a local coal mine during a six-month pilot project of dual-fuel engine technology in mining trucks. During the pilot, positive emissions reduction targets were achieved from gas for diesel substitution, and for a variety of reasons unrelated to State Gas, the proponents elected not to expand the pilot as originally planned.
State Gas is continuing to promote the efficacy of HDNG as a diesel fuel-alternative to other mines and industrial users in the Bowen Basin and surrounding areas. The Company is in advanced stages of discussions with several coal mines owners about HDNG supply and the broader application of its HDNG technology to support the capture of gas arising from underground coal mine development and expansion. Diesel substitution with HDNG has the potential to deliver significant emission reductions, quickly and at low cost for existing fleets of equipment, while simultaneously de-risking the miner to significant price volatility for diesel. This is a significant opportunity for State Gas, with diesel fuel consumption by coal miners in the Bowen Basin in excess of $2bn per annum and significant penalties arising from carbon emissions. Although current coal market conditions have resulted in a slowing in our sales cycle, we remain confident that strong demand for diesel fuel alternatives and our unique HDNG technology means the Company is strategically well positioned to respond to customer demand.
Reid's Dome Gas
Synergies between Reid's Dome (PL 231) and Rolleston West provide State Gas with optionality to increase HDNG production at the right time through connecting both resource bases via shared infrastructure. In addition to the potential for HDNG, the Company has commenced investigations into options for the conventional gas at Reid's Dome including local power generation to power remote data centres, accelerated computing and token generation.
Land Access
Significant management time and legal cost was again incurred during the quarter in defending the Company and protecting its Rolleston West Project Assets as consequence of an ongoing an access dispute with the landowner at ATP 2062. State Gas has incurred significant direct and indirect costs and losses arising from what is in the Company's view, unlawful actions by the landowner of locking the Company off the property in November 2024 and May 2025 and continued threats of disrupting our activities on site. The parties were unable to resolve these matters through an independent mediation process and both the Company and the landowner have now respectively instigated proceedings for claims of costs and losses and these matters are currently at an early stage in the Land Court of Queensland.
State Gas' objective is to undertake its exploration and appraisal activities on the property in a co-operative manner with the landowner and in exchange for the payment of appropriate compensation for access and disturbance. Notwithstanding the wider access dispute, the Company has continued to pay compensation to the landowner for ongoing access to conduct its activities on site and continues to improve its operating procedures to ensure it continues to meet the high operating standards required under the landowner's organic certification.
Finances and Capital Management
The Directors are cognisant of the Company's restricted capital position and have implemented a range of initiatives in accordance with a Capital Management plan first described in the announcement of 27 May 2025.
Critical to that strategy was the receipt of further material R & D grant claims made in respect of the development costs of the HDNG plant (which is an eligible R & D project). Receipt of these R & D grant monies was originally expected in the quarter ended 30 September 2025, but has been delayed by an ATO review processes. The Company is working with the ATO to expedite their review and release these grant monies. Receipt of these funds will restore the Company's balance sheet and establish a solid foundation for achieving the objectives described in this report.
In response to the delay in receipt of R & D grant monies, the Directors (who are major shareholders of the Company) provided further substantial financial support to the Company during the quarter by way of working capital loans. The Company acknowledges the significant ongoing financial contribution by this small group of shareholders who are committed to an efficient recapitalisation of the Company and execution of the Company's strategy at Rolleston West and in the alternative fuels space.
State Gas has adjusted overhead staffing levels to reflect a lower level of operational field activity now that the current exploration program is completed and to align with the timing of HDNG sales recommencing. During the quarter, the Company curtailed all non-essential expenditure and scaled back field operations until further capital becomes available. The Company has discretion over the timing and scale of future exploration and project development activities and can align spending with near-term objectives and the availability of capital.
Outlook
In the short term, until the R&D grant monies are received, the Company is limiting its activities to:
1. 2P Reserve Certification
2. Rolleston West Project development planning; and
3. Securing short term HDNG sales revenue as part of its Alternative Fuels strategy
After the R&D grant monies have been received and the balance sheet restored, the company plans to accelerate activities on the development of the gas fields supported by maiden 2P reserves certification (pending) and commercialisation of our unique HDNG alternate fuels solution to foundational customers.
With over 2.3km of exploration wells now drilled across three well systems at Rolleston West, the Company believes it is in a strong position to obtain third party accreditation of a maiden 2P Reserves estimate and rapidly progress the project toward development. The Company is now commencing project option studies (around sizing and infrastructure connection) and beginning the petroleum lease application process. These actions will require significantly less capital than prior years and will add substantial value to the Rolleston West Project The macroeconomic outlook for energy markets in Australia remains positive for the Company, with a continuing recognition that natural gas will play a substantial role in the provision of base load power, along with diesel fuel displacement while battery technology continues to improve over the long term. The Directors believe that the Company's exploration assets combined with its pioneering HDNG technology means it is well positioned to contribute gas supply toward addressing the substantial east-coast gas shortfall and an orderly transition to renewables and a sustainable energy security policy for Australia.
*To view the full Quarterly Report, please visit:
https://abnnewswire.net/lnk/RCA45T9Z
About State Gas Limited
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) is a Queensland-based gas exploration and development company with highly prospective gas exploration assets located in the southern Bowen Basin. State Gas Limited's mission is to support east coast energy markets through the efficient identification and development of new high quality gas assets.
It will do this by applying an agile, sustainable but low-cost development approach and opportunistically expanding its portfolio in areas that are well located to gas pipeline infrastructure.
State Gas is 100%-owner of the contiguous Reid's Dome (PL-231) and Rolleston-West (ATP 2062) gas projects, both of which contain CSG and conventional gas. The Projects, together some 1,595km2 , are located south of Rolleston, approximately 50 and 30 kilometres respectively from the Queensland Gas Pipeline and interconnected east coast gas network. State Gas intends to accelerate commercialisation of these assets through the application of an innovative virtual pipeline ("VP") solution which will see the Company transport compressed gas by truck to existing pipeline infrastructure or to an end user.
State Gas also holds a 35% interest in ATP 2068 and ATP 2069 in joint venture with Santos QNT Pty Ltd (65%). These two new areas lie adjacent to or in the near vicinity of State Gas and Santos' existing interests in the region, providing for the potential of an alignment in ownership interests across the region over time and enabling synergies in operations and development.
State Gas is also participating in a carbon capture and sequestration initiative with minerals explorer Rockminsolutions Pty Ltd in respect of EPM 27596 which is located on the western border of ATP 2062. This project is investigating the potential of the unique basalts located in the Buckland Basaltic Sequence (located in EPM 27596) to provide a variety of in-situ and ex-situ carbon capture applications.
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