Beetaloo Energy Australia Ltd ( ASX:BTL , OTC:EEGUF ) earlier this week outlined progress towards f irst gas from its Carpentaria Pilot Project as Managing Director Alex Underwood highlighted strong well performance, a solid funding position and increasing industry activity across the wider Beetaloo Basin.
Underwood told Proactive's Lauren Hayes that the company was nearing pilot production from Carpentaria, where the gas plant had moved into the final stages of construction. He said all major equipment was on site and electricians and other workers were completing the remaining work, with first gas sales expected later in the quarter.
A key operational catalyst is Carpentaria-5H, which completed a 30-day flow test during the period. Underwood said the three-kilometre horizontal well had produced at around 6.7 terajoules per day with a low rate of decline, reinforcing expectations of about 10 petajoules of gas per well.
He described the result as an important technical milestone and said Carpentaria-5H had also involved the "largest fracture stimulation job in Australian history".
Funding appears to provide additional support for the near-term development programme. Underwood said Beetaloo Energy was "fully funded to first gas", having finished the quarter with a little over $51 million in cash and about $61 million of undrawn credit facilities. He added that a $19 million R&D tax rebate would allow the company to repay its roughly $12 million Macquarie R&D facility.
Another potential longer-term catalyst is Beetaloo Digital, which is aimed at establishing an additional market for the company's gas through data centres and behind-the-meter power generation.
Underwood said access to power had become one of the key constraints on global data centre development and noted that projects in the US were increasingly locating power generation closer to gas resources. He said similar constraints were emerging in Australia and believed Northern Territory gas and solar resources could support future digital infrastructure.
The wider Beetaloo Basin is also seeing increased activity. Underwood pointed to Tamboran's commencement of gas sales, Santos' appraisal drilling and INPEX's investment in the basin.
He said the "rising tide absolutely lifts all boats", with greater activity potentially increasing the availability of equipment, services and skilled personnel while lowering costs.
For investors, the immediate catalysts remain commissioning of the Carpentaria gas plant and the start of pilot gas sales, followed by further progress in establishing commercial pathways for the company's wider gas resource.
Interview highlights
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Beetaloo Energy is progressing the Carpentaria Pilot Project toward first pilot gas sales, with major gas plant equipment on site and final construction and electrical work underway.
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Underwood described the company as one of the most active participants in the Beetaloo Basin and said the Carpentaria area contained about five trillion cubic feet of recoverable gas.
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Carpentaria-5H completed a 30-day flow test after becoming the company's first full-scale three-kilometre horizontal well.
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Underwood said the well produced at about 6.7 terajoules per day with a low decline rate, reinforcing expectations of around 10 petajoules of gas per well.
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The company expects to begin selling pilot gas later in the quarter.
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Beetaloo Digital is intended to create an additional market for the company's gas by combining gas-to-power generation with data centre development.
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Underwood said constrained electricity supply was becoming a major obstacle for data centre projects and pointed to behind-the-meter gas generation already being adopted in the United States.
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The company ended the quarter with more than $51 million in cash and about $61 million in undrawn credit facilities.
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A $19 million R&D tax rebate is expected to support repayment of the roughly $12 million Macquarie R&D facility.
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Underwood said Beetaloo Energy was "fully funded to first gas" and could concentrate on project execution.
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Rising activity from Tamboran, Santos and INPEX was viewed positively, with increased basin investment expected to expand access to equipment, services and personnel and potentially lower development costs.
Proactive: Beetaloo Energy Australia, ASX ticker BTL, holds 28.9 million acres of oil and gas exploration tenements in the Northern Territory. The company has released its September quarterly report, with its Carpentaria Pilot Project heading toward first gas sales. Here to tell us more is Managing Director Alex Underwood. Alex, welcome back.
Firstly, can you give us an overview of Beetaloo Energy and how the Carpentaria Pilot Project is progressing?
Alex Underwood: As the name suggests, we are one of the most active players in the Beetaloo Basin. This is one of the largest undeveloped gas resources in the world.
Over the last eight years or so that I've been involved, we've been actively progressing our developments, particularly the Carpentaria Pilot Project. This is an area on the eastern side of the basin.
It contains about five trillion cubic feet of recoverable gas, which is a very large volume, and we will be imminently commencing the sale of pilot gas from that project.
Proactive: Can you tell us about the Carpentaria-5H flow test and what those results showed about the well and the resource?
Alex Underwood: During the quarter, we completed IP30 flow testing of the Carpentaria-5H well. That was the first well we've drilled which is a typical full-scale, three-kilometre horizontal well like you'd see in the US shale gas industry.
It was also the largest fracture stimulation job in Australian history, which was a great milestone for our company.
What we saw was that the well produced at about 6.7 terajoules per day over that 30-day test period, with a very low rate of decline, which has reinforced resource estimates of around 10 petajoules of gas per well.
Proactive: The mechanical work on the gas plant is largely done. What's left before commissioning, and how soon after that do first pilot gas sales follow?
Alex Underwood: We've got all the major equipment on site now. We've got lots of electricians and other workers on site pulling together the final pieces of the plant, and we expect to be selling our first gas later this quarter.
Proactive: You launched Beetaloo Digital during the quarter. Can you tell us about the idea and why gas-to-power and data centres?
Alex Underwood: First of all, we've got this massive gas resource. We're very proud to be supporting the local Northern Territory market by selling our pilot gas to the Northern Territory Government under a 10-year gas sales agreement.
But as a small and entrepreneurial company, we're always looking to develop additional markets for our gas.
What we've seen through our relationships, both here in Australia and the United States, is that the biggest constraint on data centre development globally — which is a massive boom industry that is really transforming all of our lives — is access to power.
This started emerging in the US East Coast grid about 12 or 18 months ago. In the US, they've started moving to what's called behind-the-meter generation, so data centres are generating their own power, often where the gas is located.
You're seeing a lot of data centre development in places like West Virginia and now in Texas.
We foresaw that the same constraints would start emerging in Australia, and that has indeed happened. We're seeing a lot of news in the financial press about challenges that data centre operators are facing in accessing power.
Our thematic is really about driving our gas resource, but also the incredible solar resources available in the Northern Territory, to help fund that next wave of development.
That is highly consistent with the goals of the Northern Territory Government, which wants the Territory to be seen as the digital gateway to Asia, given that it is so close to those major Asian population centres.
Proactive: The R&D refund strengthened the balance sheet, with $113 million in liquidity at quarter-end, and you plan to repay the Macquarie R&D loan. How does that position you to fund the pilot project?
Alex Underwood: We're fully funded to first gas, and I've got to say, in the current equity market conditions I'm very pleased that's the case.
We ended the quarter with a bit over $51 million cash in the bank and around $61 million of undrawn credit facilities.
As you mentioned, during the quarter we received a $19 million R&D tax rebate. We will be utilising part of those funds to fully repay the Macquarie R&D facility, which has been drawn to about $12 million.
We're in a very solid financial position right now to really focus on execution.
Proactive: Tamboran has started gas sales and Santos has spudded its first Beetaloo appraisal well. What does that pick-up in activity mean for Beetaloo Energy, and what should shareholders expect over the next few months?
Alex Underwood: These are major developments for us and for the broader Beetaloo Basin.
First of all, it's amazing news to see Tamboran commence gas sales very recently. If I've got my facts right, I believe that's the first time gas has been sold out of a new basin in Australia in nearly two decades, so it's a huge achievement.
As you mentioned, we're also now seeing Santos in the midst of a critical three-well appraisal program in the block neighbouring our Carpentaria project.
The overarching comment I would make about this is that the rising tide absolutely lifts all boats.
From a technical perspective, we can all learn from each other's successes as we move up these technical learning curves.
The dramatic increase in investment coming into the basin across Tamboran, Santos and INPEX, which is coming in as joint venture partner to Daly Waters Energy, means more equipment, more services and more people. That's going to drive down costs and drive up activity.
