State Gas Limited (STGSF) Drill Data Reinforces Confidence in Rolleston West Project

State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) is pleased to announce successful drilling, wireline logging and casing of the Rougemont 6 vertical well at its Rolleston West Project (ATP 2062) in the Southern Bowen Basin in Queensland.

HIGHLIGHTS:

- Rougemont 6 well reached total target depth of 572 metres in maiden 2P Reserve drilling at Rolleston West

- Coal intersections commenced at ~404 metres, with 8.1 metres of net coal logged

- Elevated gas shows during drilling from the Bandanna coal seams and deeper Black Alley Shale

- Results confirm continuity of gas-bearing coal seams north-east of Rougemont 2/3, reinforcing a large and permeable gas production zone

- Rig relocation to Rougemont 5 vertical well underway

- Drilling results will support the establishment of a maiden 2P reserve targeting 30-50 PJ at Rolleston West

- Drilling is funded under a $5.5M Queensland Government Frontier Gas Exploration Program.

Rougemont 6 is 1.5 kilometres north-east of the existing Rougemont 2/3 dual lateral well system. The well intersected the Bandanna coal measures at 403.8 metres, with 8.1 metres of net coal close to the expected range. Elevated gas shows during drilling further validate the commercial gas potential of the formation. State Gas will incorporate wireline log data from Rougemont 6 into its geological model for ATP 2062. Data demonstrates strong correlation between with previously drilled wells.

State Gas Managing Director, Doug McAlpine, commented: "These results suggest strong consistency across the extensive Bandanna coal measures at Rolleston West. Assuming further positive results from completion of this drilling program, State Gas remains optimistic about the prospects of developing a substantial gas project at Rolleston-West.

Establishing a maiden 2P reserve in conjunction with production testing of Rougemont 5 and 6 remains the Company's immediate objective."

Drilling results from Rougemont 5 and 6, including wireline logs and production testing, are expected to support accreditation of a maiden 2P reserve of 30-50 PJ for the Rolleston West Project. Successful outcomes from the program will enable the Company to submit a petroleum lease application over a substantialportion of ATP 2062 and advance discussions with potential end users and pipeline infrastructure providers. Drilling at the two new exploration/appraisal wells is fully funded under a $5.5 million Queensland Government Frontier Gas Exploration Program.

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

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