The gas resource is big. From the Canyon drilling program, maiden 2Ccontingent resources of 1.5Tcf of gas and 69MMbbls of condensate (net)were assigned, with an upside 3C figure of 4Tcfe. The value opportunity is~A$4B at current gas prices, in a production mode. High gas prices andproject location enhance economics if commercial flow rates are established.
Data from wells identified very thick, liquid rich formations, but in lowpermeability reservoirs. The impending Canyon-1H frac will provide criticalinformation on reservoir response and inform design of drilling andcompletion techniques required for large-scale production.
Omega is an undervalued entry into the east-coast gas market. The 2Cresource is priced in the equity market at 3.6c/GJe. With gas prices in the$12-20/GJ range there is huge upside from commercializing the resource.
Valuation: A$0.67 ($0.64 previously)Omega is at a pre-production stage, so we apply industry benchmarks forundeveloped 2C resources, of 9.1c/GJe (8.5c/GJe previously), in line withpeers. Near term catalysts are (1) test results from Canyon-1H (2) potentialreserve bookings and (3) partnering with larger companies.
DFIT results
A DFIT test is a common industry technique to gain knowledge about reservoir parameters to inform amuch larger fracture stimulation.
The test involves injection of small volume of fluid into the reservoir, near the end of the well-bore,followed by pressure monitoring to observe what flows back. The test started on 21 December 2024,and pressure monitoring over 14 days delivered key data, in summary: - Significant over pressure (0.79 psi/ft, compared to a normal hydrostatic gradient of 0.42psi/ft)The over-pressure in the reservoir rocks is a key enabler to drive to in-place gas to the surface. - Reservoir permeability in line with geological models.geo-mechanical stresses lower than predicted. - Geo-mechanical stresses control where thefractures initiate, and how these propagate through the reservoir.
These results help inform the next step in the appraisal process, which is design of a multi-stage fracalong the length of the well-bore. This is planned to commence in late February 2025.
Investment case re-iteratedHuge resource, with geology broadly understood from a network of recent and historic wells.Advantageous location to meet gas-short east coast gas market or Gladstone LNG plant ullage.Proven, world class technologies being applied.Omega has a huge gas resource in Queensland's Surat Basin, at the Canyon Project, targetingPermian reservoirs in the Taroom Trough. The location is ideal to supply the gas-short easternAustralia or export LNG plants from Gladstone, with major pipelines within 50 km. Figure 2 shows thelocation.OMA has 1.5Tcfe of gas and liquids (2C, net) and a 3C estimate of ~4Tcf, backed by well data.
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