What happened to the Gas State Ltd share price?
At the time of writing, shares of Gas State Ltd [ASX:GAS] are up by 26.47%, to 21.5 cents per share. State Gas Limited has a 60% interest in, and is operator of, a petroleum lease (PL 231) in central eastern Queensland. The permit hosts a conventional gas accumulation discovered in the 1950s, within the Denison Trough.
Why did Gas State Ltd shares do this?
The company announced its June quarterly update and cash flow statement today. It currently holds around $4.4 million in the bank, with zero debt. That’s a relatively strong balance sheet. State Gas’ market capitalisation stands at roughly $9 million at 20 cents per share. In other words, the company’s enterprise valuation (market cap less cash) stands at about $4.6 million at 20 cents.
What now for Gas State Ltd?
Gas State offers significant potential at these share price levels. The project’s main target boasts a good quality reservoir at roughly 130 meters below the ground. Past testing achieved a sustained flow rate of 1.2 million cubic feet per day of pipeline-quality gas at the target.
Not a bad result…
The newer ‘North-West Gas’ prospect appears hosted within the Cattle Creek gas sands (the main target, described above) ― and it offers multiple pay zones to roughly 500 metres below the ground. The company is analysing the geology as we write, and plans to drill this target later in the year. Gas State is discussing with its joint-venture partner on how to proceed with the drill.
The bottom line: if the company taps the mother lode later this year, the share price could explode!
Resources Analyst, Markets & Money
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