State Gas (ASX:GAS) adds 21pc on gas injection in Queensland

State Gas has been awarded $5.5 million by the Queensland Government’s Frontier Gas Exploration Grants Program to drill two new wells and book in the maiden proven and probable reserves at its Rolleston West coal seam gas project in the state’s Central Highlands Region.

Success from the twinning wells would accelerate a petroleum lease application over the area and increase the chances of establishing a significant coal seam gas project 50 kilometres west of the Queensland Gas Pipeline.

The grant, standing as roughly a sixth of the explorer’s market cap, was given largely due to its unique compression and virtual pipeline assets and capabilities to capture production testing gas and deliver rapidly to market.

State Gas Executive Chairman Richard Cottee said the grant funding was a strong endorsement for both project and company.

“It demonstrates that the Queensland Government shares State Gas’ view that the area is highly prospective and capable of supporting new gas project development,” Cottee said.

He added its high-density natural gas facility’s test gas capture abilities supported the dual objectives of increasing geological knowledge of the area and accelerating new supply to east coast markets.

“The Queensland Government’s foresight in stimulating investment in increased natural gas supply, and continued support of innovation in the gas sector should be acknowledged,” Cottee said

“The state’s objectives are consistent with those outlined in the federal government’s recently released Future Gas Strategy report which identifies the critical role natural gas will continue to play in supporting an orderly transition to lower emission fuel sources over time.”

State Gas closed Friday with a market capitalisation of $40 million after adding 21 per cent to its value during the day’s trade.

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