Earlier in the week, our domestic gas exploration Investment Top End Energy (ASX: TEE) put out an update on its Northern Territory gas projects.

TEE confirmed that after on-country meetings with native title holders had been held, an exploration agreement had been reached in principle.

This represents one of the first meetings of its kind since the lifting of the moratorium on hydraulic fracturing in 2018.

The execution of the exploration agreement by the native title holders is the key prerequisite before TEE gets its permits granted.

TEE’s highest priority permits in the Northern Territory (EP 258 and EP 259) sit on the edge of the Greater McArthur Basin, south of the discoveries Santos, Origin and Empire Energy have made across the Beetaloo sub-basin.

At the moment, TEE has no seismic data available over the project area but data collected by TEE’s neighbours seem to suggest that the structures which they have drilled and made discoveries could extend into TEE’s ground.

TEE is looking to test this theory in 2023, but before the company can do any exploration work, it needs to finalise permitting and secure its tenure.

TEE also confirmed that it is currently in the planning process for up to ~150km of 2D seismic surveying planned for H1 2023.

Next:

We want to see the feedback from the native title holders come through, which is expected in the coming weeks.

If positive, then TEE will have all of the necessary agreements in place to move forward with the granting of its permits.

Earlier this week our domestic gas exploration Investment Top End Energy (ASX: TEE) provided an update on the activity of its neighbours in the Beetaloo sub-basin in the Northern Territory.

Particular focus was on the following:

1. Tamboran Resources - On 20 September, Tamboran announced that it would acquire Origin Energy’s Beetaloo projects, funded through a $195M capital raise. Tamboran also brought onboard two separate US investors as strategic investors through the capital raise.
   
2. Empire Energy - On 12 September, Empire Energy announced that its two well (Carpentaria-3H and Carpentaria-4V) drilling program is on track to be completed by early October, with extended production tests planned before the end of the year.

We are tracking the developments in the region pretty closely and think the Tamboran news is of particular interest with a heap of capital being poured into the region at a corporate level AND from international oil & gas players.

Our thinking is that exploration success and big corporate transactions like Tamboran’s will continue to bring market interest to the region, eventually flowing through to interest in the permits TEE holds.

We see these developments out of Empire are positive as part of the overall macro picture regarding the Beetaloo sub basin.

To see our latest coverage on TEE’s neighbours, actively exploring the region and how we are tracking them check out our most recent TEE note.

This morning our domestic gas exploration Investment Top End Energy (ASX: TEE) provided an update on the activity of its neighbours in the Beetaloo sub-basin in the Northern Territory.

TEE detailed the activities of:

1. Santos and Tamboran Resources - Who are production testing two wells (T2H and T3H) and currently reporting normalised flow rates of 7.4 mmscfd over 1,000 metres (T3H) and 4.3 mmscfd over 1,000 metres (T2H).
2. Empire Energy - Which just drilled and flow tested its Carpentaria-2H well reporting a normalised flow rate of 2.8 mmscf / day per 1,000m of horizontal section

For some context on these results, industry analysts and operators in the basin consider a flow rate of 3 million standard cubic feet per day (per 1,000m of horizontal well section) as the “commerciality standard”.

This means the results from its neighbours are either exceeding commerciality standards or coming extremely close.

We touched on all of the majors actively exploring the region and how we would be watching their exploration initiatives closely in our most recent TEE note.

We think that any success by TEE’s neighbours would bring market interest in the basin and eventually flow through to interest in the permits TEE holds in and around the region.

We see these developments out of Empire as positive as part of the overall macro picture regarding the Beetaloo sub-basin.

Next:

We want to see TEE conduct its on-country meetings and secure tenure over its permits that sit closest to the Beetaloo sub-basin.

Our domestic gas exploration Investment Top End Energy (ASX: TEE) is starting to outline its clean energy strategy by reviewing its projects for helium and natural hydrogen prospectivity.

Today, TEE announced that it has commissioned consultants to assess its existing portfolio of projects to see whether or not the projects are prospective for helium or natural hydrogen.

At the same time, TEE also confirmed that it is looking into potential collaboration opportunities with companies already active in Australia's natural hydrogen/helium space.

As part of our 2022 TEE Investment Memo, we wanted to see TEE outline its forward strategy concerning clean energy projects.

With today's news, TEE has taken a first step towards outlining its overall strategy, which looks like it will be in either the natural hydrogen or helium industry.

TEE has confirmed that following initial studies on prospectivity it would look to do some field surveying/sampling to incorporate all of the data into an extended exploration program in H1-2023.

At this stage, it is still too early for us to analyse TEE's strategy. We will be watching to see what comes from the prospectivity studies before providing a deeper dive into the company's natural hydrogen/helium potential.

This morning our domestic gas exploration Investment Top End Energy (ASX: TEE) put out an update on the work programs across its Queensland/Northern Territory gas projects.

Queensland gas project:

TEE’s Queensland project sits ~50km west of the Gilmore gas field, which has previously demonstrated commercial conventional gas production.

Initial seismic interpretation is indicating the same formations present in the Gilmore gas field may extend into TEE’s ground, but no wells have been drilled to test this theory.

TEE has now confirmed that it has reprocessed available existing 2D seismic data for its project and is now looking to integrate this into a new project wide geological model.

This will let TEE enhance its understanding of the overall project area, optimise the location of its upcoming 2D seismic acquisition program and identify potential drilling targets.

TEE expects the modelling and interpretation exercise to be completed in Q4 of this year whilst the company continues discussions with landowners and seismic contractors for a planned ~120km 2D seismic data acquisition program.

Next:

We want to see the company start the 2D seismic data acquisition process ahead of a maiden drilling program in 2023.

Northern Territory gas project:

TEE’s highest priority permits (EP 258 and EP 259) sit on the edge of the Greater McArthur Basin, south of the discoveries Santos, Origin and Empire Energy have made across the Beetaloo sub-basin.

Currently, no seismic data is available over the project area. Still, data collected by TEE’s neighbours seem to suggest that the structures which they have drilled and made discoveries could extend into TEE’s ground.

TEE is looking to test this theory in 2023, but before the company can do any exploration work, it needs to finalise permitting and secure its tenure.

Today, TEE confirmed that it is on track for its on country meetings with native title holders in mid-September.

Given the unexpected delays, TEE confirmed that it has used the time to negotiate the terms of a proposed exploration agreement which it aims to present at the on country meetings to native title holders.

The agreement is a key prerequisite to achieving formal granting of the permit, which should mean TEE is making up for lost time here, aiming to get it all done as quickly as possible.

TEE also confirmed that it hopes to have EP 258 granted before the end of the year and up to ~150km of 2D seismic surveying planned for H1 2023.

Next:

We want to see the company successfully complete the on country meetings and progress towards a formal granting of its key permits surrounding the Beetaloo sub-basin in the Northern Territory.

This morning our domestic gas exploration Investment Top End Energy (ASX: TEE) released a new investor presentation.

The slide deck was put together ahead of a presentation at the Northern Territory Resources Week - South East Asia Australia Offshore Conference (SEAAOC).

We found the “near-term indicative work program” slide particularly useful to see where TEE is at with its projects.

To check out the updated investor presentation, click here, alternatively, click on the image below:

Our previous note on our domestic gas exploration Investment Top End Energy (ASX: TEE) focused on the activities of its neighbours in the Beetaloo sub-basin in the Northern Territory.

We touched on all of the majors that are currently actively exploring the region and how we would be watching their exploration initiatives closely.

Our thinking is that any success by TEE’s neighbours would bring market interest in the basin and eventually flow through to interest in the permits TEE holds in and around the region.

This morning TEE’s neighbour Empire Energy put out strong gas flow rates from its Carpentaria-2 horizontal well.

Empire announced a normalised flow rate of 2.8 million standard cubic feet per day (per 1,000m horizontal section).

For some context, we noted that both industry analysts and operators in the basin considered a flow rate of 3 million standard cubic feet per day (per 1,000m of horizontal well section) as the “commerciality standard”.

This means Empire’s flow test rates up until now are right near the levels required for it to be considered a commercially viable operation.

The market also seemed to like the news adding ~$31M to Empire’s market cap - almost 2x TEE’s entire market cap, which at today’s share price of 23c per share is ~$16M.

We see these developments out of Empire as positive as part of the overall macro picture regarding the Beetaloo sub-basin.

The positive takeaway from Empire's announcement is that the Beetaloo continues to shape up as a region that could become Australia’s next gas production hub with the ability to supply the gas hungry East Coast energy markets.

With TEE weeks away from its on country meetings with native title holders, we think that if the necessary permits are granted, and the company has tenure over its permits surrounding the Beetaloo, the market could start to show an interest in the acreage our portfolio company holds.

The following AFR article discusses the latest developments in the Australian east coast energy markets.

The article discusses explicitly regulatory intervention forcing export ready gas to be directed into the domestic market to avoid shortages and ease domestic soaring prices.

CEO of Woodside Energy Meg O’Neil blames these issues on a lack of investment in new gas supply across the country.

The situation domestically is being made worse with increased demand for Australian Liquefied Natural Gas (LNG) exports due to global supply shortages stemming from the Russia/Ukraine conflict.

We have long held the view that there has been chronic underinvestment in new gas supply worldwide, especially here in Australia.

This is why we are Invested in domestic gas explorer Top End Energy (ASX: TEE), which holds prospects in the NT and QLD.

To see why we are invested in TEE and what we are looking to see the company achieve over the next 12 months, check out our 2022 TEE Investment Memo here.

Below are our key takeaways:

• On Tuesday, the Australian Energy Market Operator (AEMO) directed Queensland’s LNG producers to make more gas available for domestic consumption.
• The country’s largest producers responded, with the east coast gas pipeline at about 90% capacity on Thursday.
• This is the latest development in Australia’s energy crisis, with electricity and gas prices across the east coast soaring to record levels.
• CEO of ASX listed Woodside Energy (one of the biggest gas suppliers to the east coast markets), Meg O’Neill, blamed the east coast gas crisis on under-investment in new supply due to political and policy decisions.
• O’Neil is quoted saying, “The reality is there’s no quick fixes to this. The underinvestment is structural, that’s been underway for multiple years”.

To read the full AFR full article, click here.

The following Bloomberg article highlights the need for gas as a transitional energy source from fossil fuels toward cleaner energy technologies.

Read the full article here.

Below are our key takeaways:

• Natural gas will help accelerate Australia’s transition to cleaner energy, according to Former Chief Scientist and government special adviser on low emissions technologies, Alan Finkel.
• With Australia looking to phase out its reliance on coal-fired power plants and pivot toward solar and wind, natural gas will need to act as a stopgap to ensure reliable energy supply, said Finkel.
• Finkel also said that energy generated from coal is “too slow to respond” and won’t be able to support the kinds of green technology that will turbocharge the transition.
• Finkel closed by saying, “There is a pursuit of perfection to say get out of fossil fuels completely, and eventually we will. But for the next 10, 15, and 20 years, being able to call on natural gas to firm up the solar and wind electricity in a country like Australia will enable us to develop and deploy solar and wind at enormous scale -- more quickly than if we cannot call on natural gas”.

As of 2020, ~54% of all electricity generation in Australia was produced by coal fired power plants, gas contributed ~20%, and renewables contributed ~24%.

The interview with Finkel states what we think is obvious, that it isn’t possible to just shut down 54% of power generation capacity and replace it with cleaner renewable technologies overnight.

We agree with Finkel’s comments about needing new investment in the gas industry to act as a “stopgap” for the next “10-15-20 years”.

Eventually the world, along with Australia, can transition away completely from fossil fuels. But over the medium term we think the oil and gas industry is being starved of new investment at the expense of energy security.

We’ve long held the view that gas is the natural transitional fuel that can bridge the gap between fossil fuels and cleaner energy sources. Burning gas to produce power has a far lower carbon footprint compared to coal and oil, with the added benefit of having all of the infrastructure in place to produce and consume it.

As a result, we are Invested in gas explorer Top End Energy (ASX: TEE), which holds prospects in the NT and in QLD.

To see why we are invested in TEE and what we are looking to see the company achieve over the next 12 months check out our 2022 TEE Investment Memo here.

Overnight, EU lawmakers voted in favour of labelling gas and nuclear power as “green” as part of the continent’s plan to transition away from fossil fuels.

We’ve long been of the view that gas is the natural transitional fuel that can bridge the gap between fossil fuels and cleaner energy sources.

Burning gas to produce power has a far lower carbon footprint compared to coal and oil, with the added benefit of having all of the infrastructure in place to produce and consume it.

We think that the world is ready to embrace it as part of the energy mix for the next decade and potentially beyond that. As a result, we hold several Investments in companies looking to supply gas to energy hungry parts of the world.

The following Reuters article provides an overview of the proposed EU legislation:

Read the full article here.

Our key takeaways:

• On Wednesday the European parliament backed EU rules labelling investments in gas and nuclear power plants as climate-friendly.
• The vote in favour of the proposal means the EU can now look to pass the proposal into law. The only risk facing the proposal is if 20 of the EU’s 27 member states oppose the move.
• The new rules will add gas and nuclear power plants to the EU "taxonomy" rulebook from 2023, enabling investors to label and market investments in them as green.
• EU Financial Services Chief Mairead McGuinness said "The Complementary Delegated Act is a pragmatic proposal to ensure that private investments in gas and nuclear, needed for our energy transition, meet strict criteria".
• Slovakian Prime Minister Eduard Heger said the vote result was good for energy security and emissions-cutting targets

To see the Investment Memos for these companies click on the links below:

Elixir Energy (ASX: EXR)

• Exploration stage, coal bed methane gas, Mongolia

Invictus Energy (ASX: IVZ)

• Exploration stage, gas, Zimbabwe

Top End Energy (ASX: TEE)

• Exploration stage, gas, Northern Territory

The following Bloomberg article shines a spotlight on the ripple effects high gas prices have on the global economy.

Read the full article here.

Our key takeaways:

• Natural gas is the hottest commodity in the world right now. It’s a key driver of global inflation. Prices are up some 700% in Europe since the start of last year raising fears of a continent wide energy induced recession.
  
  
• Russia is cutting back on pipeline deliveries to Europe, the scramble to fill that gap is turning into a worldwide shortage.
  
  
• Germany says gas shortfalls could trigger a Lehman Brothers-like collapse, as Europe’s economic powerhouse faces the unprecedented prospect of businesses and consumers running out of power.
  
  
• The German government is in talks to bail out utilities which are losing some €30 million a day because it has to cover the missing Russian gas at soaring spot-market prices.
  
  
• Deutsche Bank cited growing risks of an “imminent German recession on the back of energy rationing,” and pointed to soaring power prices in Italy and France too. Morgan Stanley also predict that the whole of Europe will be in a downturn by year-end.

The Bloomberg article focuses on the repercussions gas shortages are having on the EU and the German economy in particular.

The German economy is one of the key pillars of the EU region, with a strong manufacturing industry making it an exporting powerhouse. The country is therefore heavily reliant on reliable energy supplies to keep this part of its economy functioning.

The fear that the Bloomberg article highlights is how a shortage in gas supplies or heightened prices could force shutdowns and lead to a recession.

We think this applies not only to the German economy and the EU but to the rest of the world also. With gas likely to become a more important part of the energy mix as the world transitions away from coal and oil we think investment into new supply will need to accelerate.

As a result we hold the following companies as Investment exposures to natural gas. To see the Investment Memos for these companies click on the links below:

Elixir Energy (ASX: EXR)

• Exploration stage, coal bed methane gas, Mongolia

Invictus Energy (ASX: IVZ)

• Exploration stage, gas, Zimbabwe

Top End Energy (ASX: TEE)

• Exploration stage, gas, Northern Territory