Brisbane, Australia (ABN Newswire) - State Gas Limited (ASX:GAS) advises that it has engaged a drilling contractor for its upcoming drilling campaign, entering into a Letter of Intent with Silver City Drilling Pty Ltd for that company's Rig 25 to drill at least four production wells.

The wells will be drilled as part of Phase 2 of State Gas' exploration and appraisal program for its Reid's Dome Gas Project (PL 231) in the Bowen Basin in Central Queensland, where the Company is implementing its strategic plan to bring gas to market to meet near term forecast shortfalls in the east coast market.

Centred on the highly successful Nyanda-4 well, at least four step out wells will be drilled and production tested, providing additional data to secure a significant certified reserves booking and enable field development planning and infrastructure design for commercialisation of the Nyanda area.1 Drilling is anticipated to commence this Quarter, weather permitting.

Silver City Drilling Rig 25 has a strong track record at the Reid's Dome Gas Project, having previously drilled the successful Primero West-1, Nyanda-4, and Serocold-1 wells.

State Gas and Silver City Drilling are also discussing the use of an additional rig to drill the proposed Rougemont-1 well in its new Rolleston-West Project (ATP 2062), along with production monitoring wells at Reid's Dome. Using two rigs for the combined program will enable more rapid drilling and production testing, and will also optimise rig capability for the proposed wells.

The Company is well-funded to progress the upcoming drilling and production testing at both Reid's Dome and the new Rolleston West Gas Project following a $9.5M private placement completed last week, along with a Share Purchase Plan currently underway.



About State Gas Limited:

State Gas Limited (ASX:GAS) is a Queensland-based developer of the Reid's Dome gas field (PL 231), which includes both CSG and conventional gas, originally discovered in 1954 during oil drilling prior to the existence of a pipeline network and an east coast gas market. The Reid's Dome field is located in the Bowen Basin in Central Queensland on the apex of the Springsure-Sericold Anticline. State Gas is sole Operator of PL 231, which is well-located 30 kilometres southwest of Rolleston, approximately 47 kilometres from the Queensland Gas Pipeline.

http://www.stategas.com



Source:
State Gas Limited



Contact:

Lucy Snelling
Chief Executive Officer
Phone: 0439 608 241
e-mail: lucy@stategas.com

Richard Cottee
Executive Chairman
Phone: 0458 517 850
e-mail: richard@stategas.com