State Gas Limited (STGSF) Maiden 2P Gas Reserve of 30.2 PJ Certified
State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) announced the independent certification of a maiden proved plus probable (2P) gas reserve of 30.2 petajoules (PJ) for its Rolleston West Project ("Rolleston West" or "the Project") in central Queensland.
HIGHLIGHTS:
- Maiden 2P gas reserve of 30.2 PJ independently certified for the Rolleston West Project
- Establishes a commercial reserve base capable of supporting the development of a pipeline connected gas project which can supply 10TJ/day into the undersupplied East coast market
- Provides a platform for project financing, gas sales agreements and infrastructure partnerships.
- Upside remains from ongoing appraisal and exploration drilling and step-out locations across the broader Rolleston West acreage
- Gross undiscounted economic value in a range of $360 million to $510 million
Internationally recognised subsurface consultancy and reserves auditors Netherland, Sewell & Associates, Inc ("NSAI") has provided independent certification based on data from completed wells and extended production testing within the Project area, in conjunction with their independent geological and reservoir engineering evaluation. The NSAI assessment included independent review of the Company's assumptions regarding development concept, well count, recovery factors, operating parameters and economic cut-offs consistent with current and anticipated east coast gas market conditions and infrastructure costs.
State Gas Chairman Mr Philip St Baker said: "Establishing a maiden 2P reserve for the Rolleston West Project is a defining milestone for State Gas. The 2P reserve provides the strong economic foundation State Gas needs to advance detailed engineering, progress gas sales negotiations and identify infrastructure partners required to develop the Project. The Company now has the independently certified, bankable reserves that validates many years of geological work, drilling and production testing in this area. It also demonstrates the benefit of the Company's High Density Natural Gas ("HDNG") strategy which enabled the Company to demonstrate a path to market for Rolleston West gas in advance of a traditional appraisal and development approach."
About the Rolleston West Project
The Rolleston West Project (ATP 2062) is 100% owned by State Gas Limited and is focussed on evaluating the viability of conventional and coal seam gas ("CSG") production from Bandanna Formation coals, which are extensive across large areas within the ATP and in adjoining areas. The capability to produce CSG at commercial levels from these coal formations has already been established at the Arcadia Valley field to the south-east, and at Mahalo to the north-east.
Historical drilling programs undertaken in the eastern part of the tenement (refer image 2*) have intersected approximately 8 metres of net coal, with the thickest seams laterally continuous over many kilometres. The gas content of the coals is between 5 and 6 m3/tonne dry ash free. Gas is at or near pipeline quality, between 93.8% and 96% methane.
Gas desorption data, laboratory core sample analyses and permeability data were obtained from the Rougemont 2 vertical well drilled in late 2022 and the subsequent production test (comprising a vertical production well intersected by a lateral well) which provided confidence on both permeability and gas flow.
Production testing has established sustainable commercial gas flow rates and confirmed excellent permeability within the targeted coal seams. Using its first-of-its-kind in Australia HDNG technology, State Gas compressed and sold gas from the Rougemont 2/3 dual lateral well system during the second half of calendar 2024 demonstrating both productive capability and gas quality from the project area. This data has been combined with the extensive existing dataset of coal industry and CSG data in and adjacent to Rolleston West.
Project Development Assumptions under-pinning 2P Reserve
Noting the Rolleston West Project is in the pre-development stage, NSAI independent modelling confirms that the 30.2PJ of 2P gas reserves in conjunction with the 3P reserve volume are economically capable of supporting the economics of a long life, 10TJ/day CSG project, providing pipeline quality gas to the East Coast market. The independently reviewed project feasibility model demonstrates attractive returns on capital required for the gas field development, an appropriately sized gas processing plant and permanent pipeline infrastructure that would connect the Rolleston West Project area to the Gladstone/Wallumbilla gas pipeline network. Taking into account the anticipated outcome of future drilling campaigns in the 3P reserve areas and adjacent ground which supports the larger 2C resource base, the development and operation of a long-life gas project in the Rolleston West area is attractive.
Synergy with HDNG strategy
The Company continues to execute its dual strategy of progressing a traditional pipeline supported natural gas project at Rolleston West, while opportunistically producing HDNG from production testing gas produced as part of the State Gas' ongoing appraisal strategy. When sufficient customer commitment has been obtained, State Gas can connect the Rougemont 5 and 6 wells to the HDNG plant and increase production capability.
Development Pathway
State Gas is now focussed on converting this maiden reserve into cash-flow as quickly and prudently as possible, primarily through achieving the following key milestones for project development:
- Completing concept and pre-FEED/FEED studies for gas processing, compression and export infrastructure, including integration with State Gas' existing HDNG(R) facilities;
- Progressing permanent production tenure applications and associated environmental and regulatory approvals for Rolleston West; and
- Advancing commercial discussions with potential gas offtakers, including industrial users and power generators seeking secure medium- to long-term gas supply
Value implications
There are limited recent valuation comparatives associated with transactions which value maiden 2P reserves.
On 8 November 2021, Senex Energy Limited announced the acquisition of undeveloped gas fields adjacent to the Atlas project for $1.1 million per PJ. The more recent privatisation of Senex Energy Limited suggests a highend valuation of $1.25 million per PJ. $2.1 million per PJ was paid for the privatisation of reserves in Warrego Energy Limited in 2023. Publicly available value comparative data published by Leigh Creek Energy in conjunction with Bloomberg in 2019 suggested average valuation for 2P reserves of $1.43 million per PJ at the time.
The gross undiscounted economic value of the independently certified 30 petajoules of 2P reserves is $360 million to $510 million, assuming a gas sale price range bound by the current regulated Australian east coast gas price reference of $12 per gigajoule and the 2025 calendar year average LNG netback price of $17 per gigajoule.
Details of Independent Reserve Certifier
The Reserves estimated in this announcement have been made by Mr John G. Hattner Sr Vice President and Mr Joseph M. (Joe) Wolfe, P.E. Vice Price at Netherland Sewell & Associates, Inc. Both Mr Hattner and Mr Wolfe Are qualified in accordance with Listing Rule 5.41 and have consented to the use of the reserve and to the form and context in which these statements appear.
Change to Previous 2C Resource Estimates
This Gas Reserves certification reflects a conversion of a portion of the previously estimated Rolleston West contingent resources independently certified by Mr James Crowley on 19 September 2022. Further detail about the Company's resource estimates is provided in Appendix 2. The Company's 2C resource estimate for Rolleston West, within ATP 2062 have been amended by Mr Crowley on 20 November 2025 to take into account the reserve certification provided by NSAI described in this announcement.
*To view tables and figures, please visit:
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Doug McAlpine Managing Director Phone: 0439 557 400 Email: doug@stategas.com Web: www.stategas.com
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