Our New Investment is Macallum New Energy (ASX: MNE)

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 4,103,571 MNE Shares at the time of publishing this article. Some shares disclosed are subject to shareholder approval. The Company has agreed to be engaged by MNE to share our commentary on the progress of our Investment in MNE over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

Our latest Investment is Macallum New Energy (ASX:MNE).

The Perth Basin in Western Australia has delivered multiple gas discoveries, takeovers and new gas producers on the ASX over the last 10 years.

(and with that came a number of successful outcomes for ASX small cap investors, our head analyst laments missing his first 30 bagger that was a Perth Basin stock - he says he sold too early for 33% profit)

This is the same gas province where major companies plus mining billionaires Gina Rinehart and Chris Ellison have been jockeying for positions and cutting deals trying to secure strategic onshore WA gas supply.

MNE holds 100% of “the largest undrilled gas structure in the entire Perth Basin”, and wants to drill test it for a discovery next year.

MNE is the only pure-play ASX small cap currently listed and trading with undrilled Perth Basin targets, sitting next to existing gas plants and pipelines.

MNE’s CEO Andy Furniss was previously Exploration Manager at the company that made the gas discovery which kicked off the Perth Basin exploration wave in 2014.

(and after that, worked at the giant company that acquired it)

Now he is CEO at our new Investment MNE, sitting on 100% ownership of three of the most compelling (in our opinion) conventional seismically defined targets in Australia.

MNE is targeting a first exploration well in H2 next year.

MNE is also anticipating a “farm-in partner soon” - ‘strong industry interest’ has been received to date, and multiple parties are in the data room... (source)

(a “farm-in partner” basically means a bigger oil & gas company paying for all or part of the drilling in return for some share of the upside)

MNE just raised $3M at 14c, we Invested in this round, this is our Initial Entry Price.

Below are some of the key gas discoveries, JVs, M&A and new production that happened in the Perth Basin since AWE made that gas discovery in ~2014:

The Perth Basin gas rush was kicked off in 2014 courtesy of AWE’s discovery.

After which a few ASX micro-caps became real companies...

On making a discovery in the Perth Basin, Norwest Energy ran from 0.3c to ~7c - a gain of over a ~2,200% - eventually it was taken out for ~$497M post-discovery. (source)

(the past performance of Norwest is not an indicator of the future performance of MNE.)

Coming back to AWE - it was the company where MNE CEO Andy Furniss was the Exploration Manager when they made their discovery..

Here is what Andy said in a MNE investor presentation at RIU’s Good Oil conference last month:

"Every company in the Perth Basin that's made a significant discovery has been taken out before their second well"

We also liked the below section of the presentation - it's a 30 second watch.

(or you can watch the whole presentation video in the link underneath):

(watch it in full here: MNE investor presentation from a month ago)

Andy was the General Manager of Exploration at AWE from 2009 to 2018 - as we noted above, this was the company that opened up the entire Perth Basin in 2014 with the Waitsia discovery. (source)

Andy was with AWE all the way through to the eventual $602M takeover.

And then he spent ~7 years as Vice President of Exploration at the company that bought AWE - the Japanese giant Mitsui.

(source - Andy’s LinkedIn profile)

We have been watching MNE for a couple of years, moving from being a private company to an ASX listing in February this year.

Since then MNE has shot 3D seismic, increased the size of one of its prospects by ~70%, added 52M barrels of oil to its prospect inventory, has drill ready targets, and a data room open to potential farm in partners.

Yet, its share price has come off a bit (like nearly every small ASX stock has) and we are coming in below the IPO price - arguably into a much better macro environment for oil and gas stocks.

Here are some of MNE’s key targets:

(source)

Whilst its come off a little since its 20c IPO, we have seen the stock hold up relatively well post-IPO in an otherwise terrible market over the last few months.

To us is a good sign that the company’s shareholder register isn’t full of flippers in it for a quick trading win.

We wrote about the importance of a solid shareholder register when a few weeks ago here:

“A strong cap structure is one where shareholders are here to follow a company progress its project - a busted up one is where shareholders are there for a quick profit or to cut their losses.” (source)

And we commented on how the ideal situation for an Investment is a great project in a great capital structure.

MNE’s top 20 hold ~71% of the company’s stock and ~34% of the register (after today’s raise) is escrowed until February 2028.

MNE’s annual report came out a few weeks ago. Looking at the MNE top 20 holders, and then looking at top shareholder behaviour in other companies over the last 10 years, in that report we saw:

Multiple 3-6 year holders - pretty good for a small cap register these days.

But the main reason we like MNE’s register is MNE's top three holders - Macallum Group, the McIntyre family and the Sikirich family.

(who between them hold ~29% of the company) (source)

They are the same crew that built Extract Resources - the uranium explorer that discovered the third-largest primary uranium deposit in the world at the time.

AND got taken over for A$2.18BN in 2012.

(source)

Yep... that band is back together again doing MNE - and something tells us they wont be hovering over the sell button for measly 20% wins from the IPO or latest cap raise.

Peter McIntyre (McIntyre family) was Extract’s Managing Director when the discovery was made. (source)

Steve Sikirich (Sikirich family) was on the Extract board. (source)

And Rance Dorrington - now an MNE director - was Extract's CFO and Company Secretary. (source)

After Extract, McIntyre, Sikirich and Dorrington set up Macallum Group - the private company where MNE’s assets came from:

(source - thanks to the wayback machine for this)

Peter McIntryre’s son Callum McIntyre is MNE’s Business Operations Manager.

We are backing them to (WE HOPE) re-run that Extract playbook again - but this time for gas in WA.

No guarantees of course - we will need some “drilling luck” here too - as we would with any explorer.

So with MNE we have:

1. ~2.3 Tcf of gas and ~93 million barrels of oil in undrilled targets - all 100% owned, all in the Perth Basin. (source)
   
2. A tight register with cornerstone holders who have built and sold a multi-billion-dollar explorer before.

AND

What we think is a very strong macro for oil and gas

Oil and gas has become a national security issue again.

It turns out it's still valuable enough for countries to go to war over supply AND for countries to divert typically exported supply into domestic markets.

The International Energy Agency has called it “the largest supply disruption in the history of the global oil market”. (source)

And it feels like the Middle East problem isn’t going away any time soon either.

That is everything we know - gas - which MNE is primarily going after could also play a role in powering data centres.

In fact we even came across this will doing DD on MNE:

(source - the second box is the google Ai summary)

And then there is this - a projected shortfall of supply in WA starting in 2030 and getting worse every year through to 2045:

(source)

(this is without any data centre demand - if that stuff from the article comes to fruition then this could look a lot worse)

IF MNE can execute its timelines and drill a well (and make a discovery) in 2027 as per its latest preso:

(source)

Then the discovery could be ready for development just as the market starts looking around for potential new supply options...

IF a discovery is made - MNE has infrastructure ready to go ~20km away

IF MNE makes a discovery, MNE’s could develop its project through the Red Gully plant ~20km away owned by $8.7BN Mineral Resources.

Which Mineral Resources say is “ready to be brought back into production in the near-term” - IF someone finds gas in the southern Perth Basin. (source)

(and we note there are the two big new Perth Basin plants - Waitsia and Hancock’s proposed Belisama who could be looking for gas to feed through the plants in the 2030’s)

(source)(source)

At the moment, most of the development work is focused on the northern part of the Perth Basin.

In the north ~1 well’s been drilled for every ~26km^2 of ground held.

So just about anything and everything that’s worth drilling HAS been drilled.

Now that northern part of the basin is in the “reality” phase, where they are bringing the strongest discoveries into production.

The players doing that are $130BN Mitsui, $2.1BN Beach, Hancock Energy (Gina Rinehart’s energy co) and $357M Strike Energy.

No small caps left in that bunch and almost no exploration exposure in that northern part of the basin...

We think that eventually, when it comes time to look for new supply in the basin - the majors will start to move south.

THIS time, armed with all the trials and tribulations of having gone hard in the north.

For example the deeper “Kingia Reservoir” which was responsible for the Perth Basin opening discovery by AWE.

(yes the AWE that MNE’s CEO was exploration manager at)

That Kingia reservoir has never been drilled in the Southern part of the Perth Basin:

(source) (source)

We also like that MNE’s targets all sit at similar depths to those discoveries in the north (at ~4,200-4,800m).

We also know that $8.7BN MinRes drilled its Aubisque-1 well, ~4km west of MNE’s ground, and declared the “Aubisque-1 gas discovery”. (source)

SO we know there is gas only ~4km away in the same reservoir targets at around the same depths as MNE’s 1.4tcf Barberton Deeps target.

Mineral Resources are planning a flow test there in mid-2027 so we could see a bump in interest in MNE if there is success there too.

(source) (source)

We think the Perth Basin is about to go through its 2nd big wave of exploration just as those plants to the north are up and running (at full tilt).

AND MNE, sitting on the “largest undrilled structure in the basin” - right next to processing infrastructure that is underutilised will surely find its way onto the watchlists of anyone looking to dip their toes back into exploration again...

Again, MNE says it will be drilling in H2-2027 (only a year away now).

AND that farm-out discussions are currently underway:

(source)

After today’s raise, MNE should have enough cash to get a farm-out over the line without having to come back to the market and raise cash again.

(Of course no guarantees and we have seen farm-out process’ run way beyond schedule before)

Ultimately though, we are Invested in MNE to see it bring in a partner and drill one of its four drill-ready targets.

(source)

Even if MNE can make a discovery on just one of these targets we think it would be company making for MNE.

Especially when you apply the type of multiples paid for other discoveries in the basin...

Between $1.56M/bcf and $5.22M/bcf.

(source)

Even MNE’s smaller prospects at ~30-60BCF if discovered would underpin a ~$100M valuation... IF any of the bigger ones came in then it would be multiples of that...

Especially from where MNE is capped after today’s 14c raise - at $22.6M.

In the rest of today’s note we cover our MNE Investment Memo, where you can find:

• What MNE does and the macro theme
• Our MNE Big Bet
• The 10 reasons we Invested (summary)
• What we want to see MNE deliver - objectives and milestones
• What could go wrong
• Our Investment strategy

But first, here are the 10 reasons why we Invested in MNE.

10 reasons why we Invested in MNE:

1. ASX investors have made money in Perth Basin oil and gas

The ASX knows the Perth Basin really well AND has seen small caps have success with oil and gas there.

AWE whose discovery in 2014 opened up the Perth Basin was taken over for A$602M.

Warrego for A$440M, Norwest for ~A$497M, Talon for A$142M.

Then Hancock came in and paid Mineral Resources ~$780M cash for its projects.

That's over $2.4BN of takeovers and asset sales since 2018.

(source)

2. MNE is the only pure-play small cap Perth Basin explorer left on the ASX

There is almost no other way to get pre-discovery leverage to the Perth Basin, listed and currently trading on the ASX anymore.

The smallest company besides MNE is ~$357M Strike Energy.

The rest of the players are all multi-billion dollar companies - Beach, MinRes, Mitsui and Hancock.

MNE has a market cap of $22.6M at 14c following today’s raise.

3. MNE has “possibly the largest undrilled structure” in the Perth Basin - based on 2D and 3D seismic data

MNE has a total of over ~2.3 Tcf of mean prospective gas and ~93 million barrels of oil - all 100% owned, across four prospects and two leads. (source)

(prospective resource = undrilled and unrisked based on 2D/3D seismic data)

MNE also holds what it says is possibly the largest undrilled gas target in the Perth Basin - Barberton Terrace Deep.

That single target alone has a mean prospective resource of ~1.4Tcf of gas and a company-estimated 29% chance of success. (source)

(source)

4. MNE’s targets sit in the same “Kingia reservoir” that delivered the big discoveries in the Northern part of the basin

The “Kingia sandstone” is the reservoir behind every big Perth Basin discovery since 2014.

(Waitsia - AWE which was taken over for $602M, West Erregulla - Warrego taken over for $440M and Lockyer Deep - Norwest Energy taken over for $497M.

Nobody has ever drilled a well to test the Kingia in the southern half of the basin. (source)

MNE's giant 1.4Tcf Barberton Terrace Deep prospect is interpreted to sit inside the Kingia... (source)

5. MNE’s CEO led the team that made AWE’s discovery in 2014

MNE’s CEO Andy Furniss was AWE's General Manager of Exploration & Geoscience from 2009 to 2018.

His team discovered the Waitsia field in 2014 - which eventually led to AWE’s $602M takeover in 2018.

He was an advisor to the AWE board through the 2017/18 three-way takeover battle, then spent seven years as VP Exploration at Mitsui E&P - the company that won.

Now he is back in the Perth Basin running MNE...

(source - Andy’s LinkedIn profile)

6. MNE is backed by the guys who built up and sold $2.18BN Extract Resources

MNE's top three holders are “Macallum Group”, the McIntyre family and the Sikirich family. (who between them hold ~29% of the company) (source)

They are the same crew that built Extract Resources - the uranium explorer that discovered the third-largest primary uranium deposit in the world at the time.

AND got taken over for A$2.18BN in 2012.

Peter McIntyre (McIntyre family) was Extract’s Managing Director (source), Steve Sikirich (Sikirich family) was on the Extract board (source) And Rance Dorrington - now an MNE director - was Extract's CFO and Company Secretary. (source)

After Extract, McIntyre, Sikirich and Dorrington set up Macallum Group.

We are backing them to re-run that Extract playbook again - but this time for gas in WA.

(source - thanks to the wayback machine for this)

7. MNE’s project is close to existing gas plants and pipelines

MNE’s targets sit within ~20km of pipeline tie-in points, and underused gas plants such as Red Gully are nearby.

So a discovery could be brought to market quickly (and relatively cheaply).

(source)(source)

8. WA needs new gas supply

The Australian Energy Market Operator is forecasting WA gas shortfalls in 2028 and 2030.

Then projecting a shortfall of supply that gets worse every year through to 2045.

(That is before we even consider any data centre driven demand - if the stuff from this article comes to fruition: Mystery client drives plans for WA's biggest gas power - then the shortfall could be even worse).

IF MNE can execute its timelines and drill a well (and make a discovery) in 2027 as per its latest preso.

Then the discovery could be ready for development just as the market starts looking around for potential new supply options...

(source)

9. MNE has three deep-pocketed neighbours who are active in the basin

We think that IF MNE makes a discovery there are plenty of neighbours who may be interested in whatever is found.

$8.7BN MinRes holds 100% of every permit on MNE's western boundary, has a rig back in the basin, and owns the idle Red Gully plant (which is idle right now) 20km from MNE's targets. (source)

Hancock has paid ~$1.3BN cash for Perth Basin gas since 2023 and wants to build an $850M gas plant. (source)

Mitsui and $2.1BN Beach own the Waitsia plant - whose LNG export permit runs out at the end of 2028, after which it may look for domestic gas to backfill its plant. fill it. (source)

10. $22.6M market cap, a tight shareholder register with leverage to a re-rate

The top 20 shareholders of MNE hold ~71% of the stock (before today’s raise).

About ~34% (after today’s raise) of the shares are escrowed until February 2028 - past the planned drilling window. (source)

We also like that the big holders - Macallum Group’s 18.9 million performance rights only vest if MNE books a resource or drills a well AND the stock holds above 20c. (source)

MNE after today’s capital raise will only have ~161.6M shares on issue too so there aren’t that many shares on issue here.

Ultimately we are hoping a combination of the above reasons helps deliver our Big Bet, which is as follows:

Our MNE Big Bet:

"MNE makes a gas discovery, re-rates to a $250M+ market cap through a takeover, farm-in or development funding deal at multiples of our Initial Entry Price."

NOTE: our "Big Bet" is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our MNE Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

Investment Memo: Macallum New Energy (ASX:MNE) - LIVE

Opened: 28-10-2026
Shares Held at Open: 4,103,571
Options Held at Open: 0

What does MNE do?

Macallum New Energy (ASX:MNE) is an oil and gas explorer with 100% of two exploration permits in the onshore Perth Basin, WA.

MNE’s targets add up to ~2.3 Tcf of gas and ~93 million barrels of oil (mean prospective, unrisked) across four prospects and two leads.

MNE’s biggest target is the ~1.4 Tcf Barberton Terrace Deep prospect which MNE says is possibly the largest undrilled gas target in the whole basin.

What is the macro theme?

Oil & gas is back on the market's radar after a couple of years in the sin bin.

Small cap O&G explorers are active again and the market is willing to re-rate companies that are progressing assets.

The supply shock out of the Middle East has put energy security back on the national agenda - which we think makes assets that are able to supply gas domestically attractive again.

In WA the Australian Energy Market Operator forecasts a shortfall in 2028 and then gaps every year from 2030.

MNE is the only pure-play ASX small cap currently listed and trading with undrilled Perth Basin targets, sitting next to existing gas plants and pipelines.

Our MNE Big Bet:

"MNE makes a gas discovery, re-rates to a $250M+ market cap through a takeover, farm-in or development funding deal at multiples of our Initial Entry Price."

NOTE: our "Big Bet" is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our MNE Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

10 Reasons why we Invested in MNE

1. ASX investors have made money in Perth Basin oil and gas
   
2. MNE is the only pure-play small cap Perth Basin explorer left on the ASX
   
3. MNE has “possibly the largest undrilled structure” in the Perth Basin - based on 2D and 3D seismic data
   
4. MNE’s targets sit in the same “Kingia reservoir” that delivered the big discoveries in the Northern part of the basin
   
5. MNE’s CEO led the team that made AWE’s discovery in 2014
   
6. MNE is backed by the guys who built up and sold $2.18BN Extract Resources
   
7. MNE’s project is close to existing gas plants and pipelines
   
8. WA needs new gas supply
   
9. MNE has three deep-pocketed neighbours who are active in the basin
   
10. $22.6M market cap, a tight shareholder register with leverage to a re-rate

What do we expect MNE to deliver?

Objective #1: Lock in funding for first well

• We want to see MNE fund its first well by bringing in a farm-in partner to finance drilling on its project. Ideally MNE retains >50% of the project post-funding.

Here are the milestones we are tracking:

✅ Farm-out process begins (Data room opened - October 2026)

🔲 Offers received from interested parties

🔲 Farm-in partner secured, funding up to two wells

🔲 (bonus) Alternative funding deal

Objective #2: Well planning and approvals

• We want to see MNE lock in its first drill target, receive approvals and start ordering long lead items for its first well in H2-2027.

Here are the milestones we are tracking:

✅ Land access signed for the first Barberton Terrace Deep well (~1.4 TCF target)

🔲 Final investment decision on the first well (targeted Q1 2027)

🔲 Regulatory approvals received for well locations

🔲 Long lead drilling items ordered and received (targeted Q2 2027)

Objective #3: Drill the first exploration well

• We want to see MNE drill its first exploration wells in the second half of 2027.

Here are the milestones we are tracking:

🔲 First well spudded

🔲 Second well spudded

BONUS objective: Make a discovery

• This is the big unknown success case where (with a lot of luck) MNE makes a discovery. IF this happens, then we would turn our attention to commercialising whatever MNE finds (if it finds anything commercially viable of course).

What could go wrong?

Farm-out risk

MNE is relying on a farm-out partner to fund most of the cost of drilling. There is no guarantee that MNE will be able to find a partner, or attract a farm-in partner on terms that are in line with MNE’s market valuation. Without a farm-in partner secured, the 2027 drilling timeline could also slip.

Funding and dilution risk

MNE is a pre-revenue explorer and IF a farm-out deal can’t be signed, MNE will need to come back to the capital markets to finance working capital AND/OR exploration. IF the farm-in takes longer than expected, MNE may be forced to raise cash to fund the company while it waits for a deal to get done too.

Exploration risk

Oil and gas exploration overall fails much more often than it succeeds. Even though MNE’s own estimated chance of discovery is 29% at Barberton Terrace Deep, 40% at Gadee East and 25% at Aberfeldy, these still imply that each well is more likely to come up bare or uneconomical than not.

Resource risk

MNE’s resources are prospective and unrisked, so they are just estimates of what might be there. Even with a discovery, the volumes could end up being a lot smaller than those mean estimates. MNE has itself said the strong seismic signal at Gadee East may have come from water-filled sands rather than gas, and only drilling a well here will be able to tell the difference.

Commercial risk

Even if a discovery is declared, a discovery doesn’t always result in a commercially viable project. The deeper Kingia gas at Barberton Terrace Deep sits at more than 4,000m, so MNE would need to show strong flow rates to make it worth developing.

Gas price and policy risk

WA’s gas reservation rules are designed to keep local gas prices low, currently at ~A$6/GJ in the spot market earlier this year versus over A$20/GJ seen for Asian LNG. Also, onshore Perth Basin gas can’t be exported after 2030.

There is also a federal government new gas reservation scheme in discussion - which is a big unknown, and could change the incentives negatively for any new exploration in the basin.

Delay risk

MNE still needs to obtain the usual regulatory approvals, land access and drilling equipment for these intended wells. Delays at any stage of these, or on the farm-out process, would likely push drilling back from the current forecast second half of 2027.

Other risks:

Like any junior oil and gas exploration company, MNE carries significant risk, here we aim to identify a few more risks.

Targeting deep reservoirs below 4,000 metres requires specialised deep-drilling rigs and contractor equipment that can be difficult to secure in Western Australia. Any shortage of suitable rigs or cost inflation across oilfield services could delay timelines or inflate well budgets significantly.

Commercialising a discovery relies on securing access to third-party infrastructure such as Mineral Resources' Red Gully plant or nearby transmission pipelines. If MNE cannot reach favourable terms for processing capacity or pipeline access with regional majors, monetising a viable gas field could take longer and cost considerably more.

MNE also relies heavily on the specific geological track record of CEO Andy Furniss and the founding Macallum leadership team. The unexpected loss of key personnel could disrupt ongoing farm-out negotiations and slow operational momentum on the ground.

With approximately 71% of shares held by the top 20 and ~34% under escrow until 2028, the company has a relatively low free float. This limited daily trading liquidity can lead to sharp share price volatility and make it harder to enter or exit positions smoothly.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

What is our investment plan?

We are long-term holders and intend to hold the majority of our position for 3 to 5 years, through the farm-out, drilling and any discovery related milestones.

We will apply our standard de-risking strategy:

We may look to sell up to 20% of our holding if the company delivers on its key objectives and/or the share price materially re-rates, in accordance with our trading and hold policy disclosure.

Any sell downs will be in accordance with our trading and hold policy disclosure.