State Gas Limited (STGSF) Rolleston West Drilling Program and HDNG Gas Operation
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) provides an update on its short-term plan for the Rolleston West drilling program and high density natural gas ("HDNG") operation.
As previously advised, the Company's access to the Rolleston West project area was blocked by the landowner for 18 days, with access being reinstated on 19 November 2024. The landowner's decision to block our access has impacted both the HDNG operation and the drilling program.
Blocked access to the HDNG plant has resulted in the Rougemont 2/3 dual lateral well system requiring a further process of dewatering. Based on the Company's previous experience, gas flow occurs when the well is dewatered to a depth of around 340 metres. State Gas anticipates that managing the draw-down process to ensure underlying coal structures are not damaged will take approximately six to eight weeks.
As a consequence, the Company has agreed with its HDNG customer, to suspend delivery arrangements without penalty, with the intention to recommence in late Q1 calendar 2025. In the interim, State Gas, its partners and customers will undertake optimisation work on the supply chain to support an increase from two to six mine trucks using HDNG, when supply recommences.
Blocked access to drill-pad locations has resulted in the program not being completed prior to the start of the wet season, as originally planned. Unfortunately, the wet season has commenced, and wet weather experienced over the last week has already made access difficult. The Company has assessed the wet season weather forecast and drill rig standby costs and believes it is in the best interest of all stakeholders to defer commencement of the drilling campaign until early calendar 2025 at the first available clear weather window (expected to be in March and April 2025).
The Company's Managing Director, Mr Doug McAlpine said "Deferral of the drilling program and disruption to our HDNG supply arrangements are frustrating by-products of having our land access blocked for an extended period. Despite this we are focused on delivering on our overarching strategy and plan."
Doug McAlpine Chief Executive Officer Phone: 0488 007 889 Email: doug@stategas.com
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