EXR’s neighbour raises $46M - what happens next?

Something’s brewing in the Taroom Trough in QLD around our Investment Elixir Energy (ASX: EXR).

EXR’s ground sits in the same region as projects owned by $313BN Shell, $22BN Santos and $227M Omega Oil & Gas.

EXR is the single largest acreage holder of its peers and has net contingent resources of ~3 trillion cubic feet (Tcf) of gas.

EXR is also the largest acreage holder in the region, across its acreage, EXR has net resources of ~3TCF.

Yesterday, EXR’s neighbour $227M Omega Oil and Gas pulled off a $46M capital raise.

Capital raise included billionaire Flannery family and QLD gas heavy hitters Tri-Star…

Tri-Star are long term pioneers in Queensland's gas basins from exploration through to development - so for them to follow their investment and back Omega in a big way is for us validation of the potential in the Taroom Trough.

Omega is now cashed up to drill multiple wells and “pursue growth opportunities”.

Our view is that both of those could in some way impact EXR.

EXR is currently capped at $64M and is the single biggest acreage holder in the basin.

IF Omega are looking to snap up ground, they would surely be running the ruler over what EXR holds…

AND any positive newsflow from Omega’s drilling should mean more eyeballs on the region in general.

More eyeballs could mean more interest in EXR, especially with all of the work EXR has planned on its ground over the coming months.

What's next for EXR?

The following slide from EXR’s most recent presentation lays out what we can expect to see over the coming months.

(Source)

Here are the catalyst we will be tracking:

1. Drilling of the Diona-1 well

EXR is free carried on this well under a farm-out agreement with ASX listed Xstate Resources.

Last week they announced that the Well Pad construction had been completed with the drilling rig expected to arrive yesterday (22nd September). (Source)

2. The conclusion of a “capital process”

We assume this means some sort of partnership discussion around financing for the rest of EXR’s work programs.

EXR has talked about being in active discussions regarding this several times now.

It is already partnered with Santos on some of its acreage and earlier in the year we saw supermajor ConocoPhillips was also looking at assets in the region (Source).

We covered all of this in a previous note here: EXR outlines in new strategy for QLD gas project

Maybe Omega is one of the parties at the table now after the mega cap raise completed today?

3. More news from EXR’s neighbour Omega

We will also be watching out for more newsflow from EXR’s regional peer Omega Oil and Gas.

With the cash raised today that should mean a lot more newsflow out of Omega.

We are especially looking forward to Omega accelerating progress on its Canyon project with 3(+1 optional) vertical wells planned for next year.