State Gas Limited (STGSF) Annual Report to Shareholders

State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) is a gas exploration and development company with operations in the southern Bowen Basin in Central Queensland. The Company's mission is to support energy markets through the efficient commercialisation of previously undeveloped gas resources. It will do this by applying an agile, sustainable but low-cost development approach and opportunistically expanding its acreage in highly prospective areas that can either apply the Company's compressed natural gas ("CNG") trucking approach or have access to traditional gas pipeline infrastructure.

The Company's existing 100% owned projects at PL231 and ATP 2062, in conjunction with joint venture interests over substantial adjoining areas, means that the Company has exposure to a highly prospective gas producing region in the southern Bowen Basin. In addition to supporting substantial 2C gas resources, the Company believes there are significant opportunities for synergistic and coordinated development of this important gas region over time.

The Company has continued to refine its strategy of delivering early-stage production using its CNG trucking approach. During the year, the Company completing a range of planning and precommissioning activities, to enable the commencement of construction of the compressed natural gas facility ("CNG Facility") and begin production and sale of gas ("the CNG Project").

Pursuant to the successful completion of capital raising transactions post year end, funding is now in place to allow construction of the CNG Facility. It is the Company's intention to immediately install and commission the CNG assets and commence selling compressed natural gas using its CNG trucking solution.

The Company's CNG trucking solution (or a Virtual Pipeline) draws on the North American experience in the cost-effective development of this option, to commercialise gas production in infrastructure remote areas. The Company has studied this technology and, in conjunction with its engineering partners, developed a unique application for coal seam gas ("CSG"). When completed, the Company's CNG facility will intake, dehydrate and compress CSG provided from Rougemont 2/3. The CNG is then filled into safe, specially designed gas tube trailers that will transport the gas to end users or an existing pipeline tie-in location. The existing ATP 2062 instrument and associated environmental approval allow the operation of the compression facility at that location during production testing.

Successful execution of the CNG strategy will begin to demonstrate the Company's credentials as an innovator in the junior energy sector and provide a pathway to realise the significant value inherent in the Company's asset base. It will allow the Company to generate modest operating cashflows which will see it significantly reduce its reliance on new equity capital to finance its exploration activities and other operating costs.

*To view the Annual Report, please visit:
https://abnnewswire.net/lnk/KL4NA415

Doug McAlpine
Chief Executive Officer
Phone: 0488 007 889
Email: doug@stategas.com

Richard Cottee
Executive Chairman
Phone: 0458 517 850
Email: richard@stategas.com

News Provided by ABN Newswire