• HDNG deliveries supporting successful trial demonstrating large mine trucks running on gas
• Mining services customer now working to expand trial to more trucks
• Resolution achieved in access dispute which impacted exploration drilling program

State Gas Limited (ASX: GAS) releases an update for the quarter ending 31 December 2024. The company successfully resolved an access dispute with a landowner associated with the Rolleston West Project, which had impacted the HDNG production schedule. The company is now looking forward to executing planned exploration activities during the March Quarter. Despite the short-term challenges, the company remains optimistic about 2025 being an important and productive year. The HDNG production plant continued to operate as part of the trial of dual fuel engine technology at a local coal mine, with the objective of demonstrating that large mine trucks can operate efficiently on a dual fuel engine with reduced CO2 emissions. The trial has been successful, and the company is working with its customer to expand the trial to six mine trucks. The company also resolved access issues at its Rolleston West Project, which had temporarily halted HDNG production and pushed back the exploration program. The company remains focused on converting a substantial portion of its contingent resources into 2P reserves, which will support long-term project investment in the Rolleston West Project. The company is also evaluating strategies to accelerate and expand its HDNG supply capabilities, which will directly reduce its reliance on additional equity capital.

The company expects a significant cash inflow in late February 2025 under the continued program of grant funding arising from its R&D expenditure incurred in developing the HDNG plant. In conjunction with the Frontier Gas Exploration Program funding for the two new wells, the company is expected to have sufficient capital to support its current plans over the medium term.

The company is working towards completion of a two-well drilling program and demonstration of the substantial underlying value in the Rolleston West Project. The company remains optimistic that the HDNG technology will create substantial opportunities for natural gas to be used in a range of commercial applications, supporting lower carbon emissions. The company is well-positioned to support the growing energy demand on the East Coast of Australia, with a continuing recognition that natural gas will play a substantial role in the provision of base load power and diesel fuel displacement.