Tri-Star Group has increased its interest in Omega Oil & Gas to 19.9% in a show of confidence in both the company and the Taroom Trough. Pic: Getty Images
Energy
Picking the right resources investment can be tricky, so punters tend to sit up and take notice when a veteran exploration and investment group choose to raise their long-standing interest in a company during a capital raising.
This is all the more true when said investor – Tri-Star Group – was involved in drilling the first commercial coal seam gas well in Queensland and played a key role in discovering some of the world’s best coal seam gas fields, which in turn led to the development of the state’s lucrative CSG-LNG industry.
Tri-Star Group, which is owned by the Butler family and has been involved in oil and gas exploration since 1988, moved to increase its interest in Omega Oil & Gas (ASX:OMA) from 19.5% to 19.9% during the latter’s recently completed (and heavily oversubscribed) $7m institutional placement.
The placement was carried out at no discount to the market price of 31.5c, another sign of investor confidence, and closed early with placement bids scaled to meet demand. It was also backed by the Flannery family, with the mining and energy dynasty maintaining its 29.9% holding.
Proceeds will be used to accelerate an appraisal program if positive results are obtained from OMA’s upcoming fracture stimulation and flowback program at its Canyon-1H horizontal well in the southern Taroom Trough, Queensland.
READ: Queensland’s Taroom Trough is the solution for the east coast’s gas supply woes
So just why has Tri-Star demonstrated its continued strong support for OMA?
Speaking to Stockhead, Tri-Star Australia chief executive officer Andrew Hackwood – who also serves as a non-executive director of OMA – was clear about the reasons.
“Omega’s progress continues to reinforce the importance of our investment as a commitment of confidence in them and the potential of the Southern Taroom Trough,” he noted.
He added that recent outcomes such as the successful diagnostic fracture injection test – essentially a mini frac – had also added to this confidence.
The DFIT confirmed high overpressure of 0.79 psi/ft and favourable reservoir properties within the target Canyon sandstone reservoir.
This determined that the reservoir had good permeability, which meant it would likely flow well, a finding that could mean less wells will be required to produce the same volumes.
Hackwood adds that the project’s proximity to pipeline infrastructure is another positive.
“It is probably closer than 150km from the Wallumbilla hub from which you can transport gas to export and any domestic market on the east coast,” he said.
“There are other potential plays that are talked about a lot more that are much further away from infrastructure.”
Learnings and technologies that have been used to exploit similar plays in the US are also expected to make a difference at Canyon-1H with Hackwood noting that horizontal drilling especially has unlocked a lot of gas in the US.
“What we are looking for is high impact exploration that we believe in. Making material gas discoveries is not easy, it doesn’t happen every day but we really do believe the Omega play has significant potential,” he said.
Hackwood also noted that with its strong in situ gas potential and proximity to infrastructure, the Taroom Trough is well-positioned to meet forecasted shortfalls in eastern Australia from 2027 onwards, and that OMA is well-positioned to deliver.
“The results of the Canyon-1H production tests will be crucial in the context of the east coast’s energy security and potentially attracting a new wave of investment from global oil and gas companies,” he added.
“Shell’s current appraisal of the Taroom Trough confirms the significance of the play.”
The Australian Energy Market Operator had flagged in its 2024 Gas Statement of Opportunities that eastern Australia could experience shortfalls on extreme peak demand days from 2025, small seasonal supply gaps from 2026, and the controlled reduction of electricity supplied to homes and business during periods of peak demand from 2028.
Meeting this expected shortfall will require significant investment in exploration and development, though OMA and Shell’s activities might have already answered the question of where to look.
OMA currently expects the frac spread – the equipment and materials required to carry out fracture stimulation – to arrive towards the end of February or the first week of March.
Once there, it will take up to eight days before it starts the frac job, which will take up to four days, then flowback will occur.
Chief executive officer Trevor Brown told Stockhead earlier in January that it would be about mid-March before the company had a stable rate that it could release to the market.
Success will give the company encouragement to develop its forward work program, which will involve some seismic and more drilling.
At Stockhead, we tell it like it is. While Omega Oil & Gas is a Stockhead advertiser, it did not sponsor this article.
