This is an excellent Broker note on GAS.
Some very important points within this document.
Looks like pressure testing to begin within next couple of weeks.
Great East Coast GAS play and could really go places if the testing work comes up trumps.
It's all there time to get it on.
Pumper
Morning,
State Gas (GAS.asx) made a low key entry onto the ASX back on October 10. The IPO was done via Morgans (Brissy desk) as is very tight (well done to them)
The East Coast gas story is not going away and clearly money is going to come for it. The COI book from last weeks $10m raise apparently 3 x covered and they have CSG (not conventional gas like GAS)
GAS BUSINESS STRATEGY : State Gas' strategy is to focus on bringing the shallow (only 150m deep) , conventional gas target of the Cattle Creek Formation in PL 231 to market as quickly as possible and, in doing so, benefit from the favourable supply constraints for gas on the east coast. Gas is in the progress the appraisal and development of the conventional gas resource at PL 231.
Why I like GAS a lot and should go higher from here.
1. Video https://www.stategas.com/ . A lot of infrastructure in place as per video (probably $50m+ spent on it over the years. Gas is there and is good quality)
2. East Coast gas issues only going to get louder over the next 12 months.
3. GAS are pressure testing and assaying their conventional gas at the end of November/December 2017. Already a lot of info in the Prospectus.
4. Gas is reinterpreting historic 2D seismic on its assets, which should be released in Feb 18.
5. GAS to drill two wells on the shallow targets in late Feb/ March 2018 (only 150m deep)
6. This is conventional gas with methane at 97%+ and low Co2. No processing required and can go straight into gas mains 50km away (GOOD QUALITY GAS)
7. 2nd deeper target will be drilled to ~ 1300m (timing unknow cost of wells ~$4m)
8. Origin are drilling Reid’s Dome structure 30km away and have to drill to depth of 4-5km which will cost ~$50m (suggested timing is Q2 CY18). GAS has the better area
9. GAS owns the highest part of the structure only 1300m deep
10. Preso attached
11. Website www.state-gas.com<http://www.state-gas.com>
12. Quality Board
13. 15 wells drilled since 1950
14. Only 26m tradable shares until June 2018
I’m expecting GAS to get a lot more interest after the pressure testing and assays are out.
PL 231 is located in the Denison Trough in central eastern Queensland, approximately 545 km northwest of Brisbane and 50 km southwest of Rolleston.
PL231 hosts two targets: the primary focus for State Gas in the short to medium term is a conventional, shallow gas target in the Cattle Creek Formation, a marine sandstone source rock.
A secondary target is the underlying Reids Dome beds. The underlying Reids Dome beds are anticipated to be at least 2,770 metres thick and have not been fully penetrated in the Denison Trough. They provide an exciting future target for State Gas, potentially through a farm-out. Both targets have produced gas during the drilling of exploration and appraisal wells on PL 231. A number of historical wells have flowed gas from the Cattle Creek Formation, which was reached at depths of as shallow as 130m.
GAS Price at posting:
42.5¢ Sentiment: Buy Disclosure: Held
