Directors' Report (continued)
6. Review of operations (continued)
Despite the considerable disruption on global markets due to the uncertainty surrounding the COVID-19 pandemic, the Galilee Board and management teams have considerable experience in the sector and have successfully worked through such market volatility and uncertainty and through prudent management we are in a position to focus on the delivery of our growth plans due to the strong financial position of the Company. The Company proactively adapted its operating procedures both in head office and field operations in accordance with the Federal requirements associated with the COVID-19 pandemic. The safety of our staff and all contractors was paramount with the revised operating procedures and there was no disruption to the drilling programmes or field operations.
The Board acknowledge that these events are serious matters but the Board does not believe the COVID-19 pandemic will impact at all on the ability of the Company to prosecute its strategy nor on its ability to continue as a going concern and we remain focussed on our clear strategy of becoming a significant supplier of gas into the east coast markets. With our robust balance sheet, high-quality,low-cost nature of our assets and a disciplined approach to capital allocation, we are well positioned to withstand the current market volatility.
Galilee has a high quality portfolio of acreage across three different basins in Queensland with one of the largest contingent gas resource bases on the east coast. In addition, all acreage is held at 100% working interest and these assets offer both conventional and unconventional targets with a clear pathway to market.
Galilee has no direct exposure to global oil prices and our diversified gas acreage in Queensland provides opportunities to meet the forecast supply-demand gap that exists on the east coast of Australia from around 2022 due to the continuing uncertainty regarding indigenous gas supply. The infrastructure partnership Galilee has with Jemena underpins our Glenaras Gas Project development plans.
Significant work has progressed on Glenaras Gas Project water management during the year, including the development of a management plan to utilise produced water for irrigation purposes. Work was successfully completed on remediation of the legacy Rodney Creek and Glenaras vertical pilot wells during the financial year.
The Company manages risk in accordance with its risk management policy to ensure that the risks associated with oil and gas exploration activities are identified, measured and mitigated to the lowest practicable level. Risk assessments are conducted on a regular basis by the management team and are reported through to the Risk Committee. The Board and delegated Risk Management Committee are responsible for overseeing the risk management framework. Policies and procedures are continually developed, reviewed and enhanced as appropriate to manage the current and changing risks of the business.
The Kumbarilla exploration programme in ATP 2043 was completed safely and within budget. The three wells, Kumbarilla Central 1, 2 and 3, were drilled through the complete Walloon Subgroup section and acquired valuable data that will now be used to further evaluate the permit's coal seam gas potential. Reprocessing of over 675km of existing 2D seismic data within ATP 2043 is approaching completion and has provided significantly improved, high-quality imaging of the subsurface structural and stratigraphic architecture.
Galilee was confirmed as preferred tenderer of ATP 2050, the Springsure Project, with 100% equity. This 1,425km2 permit in the northern Denison Trough has multiple coal seam gas and conventional gas play types with considerable resource potential immediately adjacent to the northern Denison Trough gas fields. Initial exploration work at the Springsure Project is progressing well, with the reprocessing of over 700km of existing 2D seismic.
As at the end of the financial year, Galilee was focussing on the performance and the newly acquired subsurface data at the Glenaras Gas Project, including initiating an external reservoir simulation study by Schlumberger to analyse the current production and pressure performance of the Glenaras pilot to optimise future drilling and development options.
7. Matters subsequent to the end of financial year
The sum of $4 million was received on 13 July 2020 with respect to an R&D tax offset claim. Neither this matter or any other matters or circumstances will significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years.
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