Real Energy may have nearly $8 million in the bank, but the ASX has queried the junior oil and gas explorer over its spending habits.

The bourse highlighted the March quarter where Real Energy (ASX:RLE) had negative operating cash flows of $257,000 and cash of $7.7 million — but an expected cash burn of $4.7 million for the June quarter.

“It is possible to conclude, based on the information in the Appendix 5B, that if RLE were to continue to expend cash at the rate indicated by the Appendix 5B, RLE may not have sufficient cash to continue funding its operations,” the ASX noted.

Real Energy tried to put the bourse’s mind at ease by saying it is drilling two gas appraisal wells in Queensland’s Cooper-Eromanga Basin in the current quarter that it believes will lead the company to production and cash flow.

The company revealed on Thursday that it had encountered gas during drilling of its Tamarama-2 well.

RLE shares over the past year.
RLE shares over the past year.

Real Energy is not planning to drill any gas appraisal wells in the September quarter, meaning forecast costs are expected to be lower.

“The company has sufficient funding for its current program and is likely to consider funding proposals once the results from the current wells Tamarama 2 and Tamarama 3 are known,” company secretary Ron Hollands said in a response to the ASX.

“If these wells are commercially successful Real Energy believes that many different financing options will be available to the company.”

Financing options include selling down its stake in permits or bringing in a joint venture partner, according to Mr Hollands.

Real Energy is also considering debt and equity raisings.

Shares were down 1 per cent to 9.6c on Friday morning.