State Gas Limited (ASX:GAS) Production Testing Update Reid's Dome Project

Brisbane, Australia, Jan 27, 2021 - (ABN Newswire) - State Gas Limited (ASX:GAS) is pleased to provide an update on production testing activities underway during the Phase 2 exploration and appraisal program at its 100%-owned Reid's Dome Gas Project (PL 231) in the Bowen Basin in Central Queensland.

As previously advised, a primary objective of the Phase 2 program is to appraise the Nyanda area for early development following the strong performance of the Nyanda-4 Coal Seam Gas (CSG) well, producing gas at rates approaching 500,000 cubic feet per day during testing in late 2020. Accordingly, the Company has drilled two "step out" wells approximately 2.5km to the north (Nyanda-7) and south-west (Nyanda-8) of the Nyanda-4 well, to guide the delineation of an early development area. As announced on 6 January 2021 the new drilling has confirmed the widespread presence of gas-bearing coal seams and significant net coal within the Nyanda area, with all three wells intersecting good quality coals with seams of similar thicknesses and depths and evidence of open fractures.

With these encouraging results the Company is embarking on production testing of the wells, commencing with the Nyanda-4 well being returned to production on 19 January 2021. Gas flows re-commenced immediately at Nyanda-4 with the resumption of dewatering. The well is expected to take some time to recover performance, however rates have been increasing steadily as water levels are slowly lowered. As at 6.00am (AEST) on 27 January the gas flow rate was 57,500 standard cubic feet per day.

Nyanda-7 has now also been completed for production, and testing commenced on 25 January. The well is currently being dewatered to lower wellbore pressure and enable the gas to be produced from the coals.

The Services Rig is currently operating at the most recently drilled well, Nyanda-8, to install the pump to enable dewatering for gas production. All three CSG wells in the Nyanda area are expected to be dewatering by early next week.

The Phase 2 campaign at Reid's Dome also includes proposed wells in the north and central areas of the permit. As advised on 6 January, the drilling of these wells has been held over until the intensity of the current La Nina weather event has passed (the site has received more than 14 inches of rain since 1 December).

Commenting on the results to date Mr Richard Cottee, Executive Chairman said: "I am very pleased with the early recommencement of gas flows at Nyanda-4, particularly as we have only just brought the fluid level in the well below the coal seams. I look forward to providing updates on production at the latest wells, Nyanda-7 and Nyanda-8, in due course."

"The wet weather has been a challenge, but I am very pleased to see these wells being brought on quickly, enabling us to progress towards early development", he said.

About State Gas Limited:

State Gas Limited (ASX:GAS) is a Queensland-based developer of the Reid's Dome gas field (PL 231), which includes both CSG and conventional gas, originally discovered in 1954 during oil drilling prior to the existence of a pipeline network and an east coast gas market. The Reid's Dome field is located in the Bowen Basin in Central Queensland on the apex of the Springsure-Sericold Anticline. State Gas is sole Operator of PL 231, which is well-located 30 kilometres southwest of Rolleston, approximately 47 kilometres from the Queensland Gas Pipeline.

http://www.stategas.com

Contact:

Lucy Snelling
Chief Executive Officer
Phone: [phone]
e-mail: [e-mail]

Richard Cottee
Executive Chairman
Phone: [phone]
e-mail: [e-mail]

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