Highlights
• Mahalo Joint Venture – Santos (Development Operator) and Comet Ridge finalised select phase
development plans during the September quarter. During October the select recommendations
proceeded through the Operator’s internal assurance review. The next step is JV investment
committee approval (scheduled for November) to commence Front End Engineering Design (FEED)
for the gas field, gathering system, gas compression and water handling facilities (Upstream FEED).
• Mahalo Gas Hub pipeline – Jemena submitted a FEED offer (Pipeline FEED) to the Mahalo Joint
Venture participants to construct a new 10-inch pipeline that Jemena would build, own, and operate
to connect the Mahalo Gas Hub with Jemena’s Queensland Gas Pipeline (for domestic gas transport)
and the GLNG pipeline (for LNG gas transport). Approval of the Pipeline FEED proposal is planned to
occur concurrently with Upstream FEED approval.
• Mahalo East pilot, funded primarily from a $5 million Queensland Government grant, commenced
during the quarter with positive results to date:
o Mahalo East 1 (vertical well) – drilling successfully completed in October intersecting
7.2 metres of net coal across the target coal seams. Coal depth and seam thickness in line
with Comet Ridge’s extensive geological model with better than modelled permeability,
particularly in the lower two seams.
o Mahalo East 2 (lateral well) – commenced drilling in late October, intercepting the Mahalo
East 1 vertical well and now drilling ahead laterally through the target Aries coal seam.
• Mahalo North environmental approvals and permitting progressed:
o Environmental Authority (EA) application awarded by the Queensland Government in August.
o EPBC referral is ongoing through the Federal Government, with Comet Ridge activities during
the quarter focused on responding to a detailed preliminary data request.
• Data Room process – due diligence and commercial discussions continued with multiple parties
during the quarter including project equity options and development funding.
• $11.4 million of cash at end of September 2024 (unaudited), which included $1.2 million of additional
expenditure compared to prior quarters that will not be incurred in the upcoming quarter.
1. Mahalo Gas Hub Area, Bowen Basin, QLD
a) Overview
Comet Ridge holds 100% equity in four project areas in the Mahalo Gas Hub area and a 57.14% interest in the Mahalo
Joint Venture Gas Project (with Santos QNT Pty Ltd (Santos) holding 42.86% as Operator). These projects are close to
existing pipeline infrastructure and the main natural gas demand and hub centres in Queensland - Gladstone to the
east and Wallumbilla to the south (see Figure 1).
The Mahalo Gas Hub’s high-quality, shallow fairway (see Figure 2) has been extensively appraised and, importantly,
has demonstrated excellent productivity from three separate pilot production tests. The Mahalo North 1 pilot in
ATP 2048 (Comet Ridge 100% equity) was production tested in 2022 and achieved a very impressive gas flow of
1.75 MMcfd (million cubic feet per day) from a single vertical pilot production well intersected by a dual lateral well.
Comet Ridge has also commenced drilling a new lateral pilot at Mahalo East (see well locations within ATP 2061 shown
in red below) designed to infill the Mahalo Gas Hub dataset with the first production test on the eastern flank
confirming development confidence. The Mahalo East pilot is approximately 25 km from the Mahalo North pilot.
2. Project Development Activities
Comet Ridge is developing its Mahalo Gas Hub assets to provide material gas supply for Australia’s east coast gas
market. There is a lack of material, green-fields developable gas on the east coast to help support a market that is
structurally short due to the decline of southern offshore fields, and government policy interventions at a state and
federal level. The independently certified reserves and resources to date include Comet Ridge’s 100% owned and
operated Mahalo North and Mahalo East blocks, and the larger, Santos operated, Mahalo Joint Venture Gas Project
(COI interest 57.14%). These projects will be further supplemented by planned development of gas resources from
Comet Ridge’s other 100% held permits at Mahalo Far East and the newly awarded Mahalo Far East Extension.
a) Mahalo Joint Venture (Comet Ridge 57.14%) – PLs 1082 & 1083 / PCAs 302 to 304
Tor McCaul, Managing Director: “The Mahalo Joint Venture Project has achieved key
milestones in the past quarter, having progressed through select phase, followed by the
Operator’s internal assurance review recommending that Mahalo proceeds to FEED.”
The Mahalo Joint Venture Project has the necessary scale (with 266 PJ gross 2P Reserves and 458 PJ gross 3P Reserves)
to support the development of new gas compression facilities and a circa 80 km pipeline connection.
The Mahalo JV Project has environmental and permit approvals in place for gas production and processing, with the
final approval step being a new circa 80 km (10-inch diameter) pipeline connection to both Jemena’s Queensland Gas
Pipeline (for domestic gas supply) and to GLNG’s pipeline to its Gladstone LNG facility (see Figure 1). The pipeline
connection will be delivered through the grant of a Queensland Government pipeline licence and access agreements
with landholders, which are being progressed.
During the September quarter, the Mahalo Joint Venture participants, Santos (Operator) and Comet Ridge, undertook
all of the necessary planning and cost analysis for the upstream components of the select phase of work to be
completed. The scope of the select phase includes drilling and completion, gas and water gathering systems, gas
compression facilities and water handling facilities. Santos, as Operator, has compiled detailed engineering and cost
reports for each of these disciplines and recently concluded an internal assurance review independent of the project
team. Mahalo JV Project has been recommended to move into the detailed Upstream FEED stage. This is now only
subject to internal investment approval of the FEED budget by both Santos and Comet Ridge, scheduled for November.
Once approved, it is expected that Upstream FEED will commence immediately thereafter, with a plan to conclude
FEED and reach a Final Investment Decision (FID) in CY2025. Concurrent with select activities, Jemena has provided a
Pipeline FEED proposal to the Mahalo Joint Venture participants, involving a new 10-inch pipeline to be constructed
by Jemena on a build, own and operate basis. This will remove the capital cost of the pipeline from the Mahalo Joint
Venture development capex and be replaced with an operating cost (tariff) once gas production commences. It is
planned that Pipeline FEED will be approved at the same time as Upstream FEED and be concluded within the same
planned FID timeframe.
b) Mahalo East (Comet Ridge 100%) – ATP 2061
“The early indications from the recently drilled Mahalo East 1 vertical well are very
encouraging and provide additional development confidence for the Mahalo Gas Hub.“
Comet Ridge commenced a new pilot well drilling program during the September quarter, with drilling and testing
costs primarily funded from a $5 million grant under the Queensland Governments Frontier Gas Exploration Grants
Program. The pilot comprises a vertical production well (Mahalo East 1) and a lateral well (Mahalo East 2), similar in
design to Comet Ridge’s successful Mahalo North pilot. Mahalo East currently has independently certified 2C (31 PJ)
and 3C (122 PJ) Contingent Resources and the pilot test is the next step in certifying Reserves and positioning the
project for development.
The drilling of the pilot commenced in early October with the Mahalo East 1 vertical well reaching a total depth of 362
metres, intersecting 7.2 metres of net coal across the target coal seams as anticipated. This well was drilled to obtain
confirmatory coal reservoir data in the northeast section of the high-quality fairway and 79.3 metres of core was cut
from above the top coal right through the coal reservoir section. Core recovery achieved was 98.8%.
As expected, gas was observed bubbling from core as the core samples arrived at surface and were immediately placed
in sealed containers for lab measurements and analysis which will continue over the next couple of months. A full set
of wellbore geophysical logs were also obtained and four short wireline conveyed flowtests were conducted, one
across each of the four coal seams intersected.
Early analysis of the Mahalo East 1 data indicates coal depth and seam thickness are in line with Comet Ridge’s
extensive geological model, with better than modelled permeability, particularly in the lower two seams.
The Mahalo East 2 lateral well commenced drilling on 20 October 2024. At the date of this report, the lateral well had
successfully intercepted the Mahalo East 1 vertical well and is drilling ahead within the (top) Aries seam as planned.
c) Mahalo North (Comet Ridge 100%) – ATP 2048, PLA 1128 and PLA 1132
“Comet Ridge has undertaken additional environmental field work over the past quarter,
relating to groundwater ecosystems, which support its original EPBC submission back in
October 2023. The Company is responding to DCCEEW information requests in the coming
weeks and hopes to finalise EPBC approval early in 2025.“
Comet Ridge’s recent focus at Mahalo North has been to secure two environmental approvals (Queensland and
Federal) for the initial development area within Petroleum Lease application 1128 (PLA 1128), followed by award of
the Petroleum Lease (PL) 1128 by Queensland Department of Resources.
The State Environmental Approval (EA) was awarded to Comet Ridge by the Queensland Department of Environment,
Science and Innovation for PLA 1128 in August 2024. This is an important milestone for Mahalo North and a precursor
to award of the PL.
In relation to the Federal approval under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC),
Comet Ridge has spent the last two quarters preparing its response to the Department of Climate Change, Energy, the
Environment and Water (DCCEEW) in relation to that department’s detailed information request. This has required
Comet Ridge to undertake additional field work relating to groundwater dependent ecosystems (GDE) to support its
original submission, including:
• drilling five groundwater monitoring bores and monthly sampling of water chemistry and standing water
levels; and
• field verification by a GDE expert of twenty sites with ground auger, and leaf and twig sampling for isotopic
analysis of up to five areas within the twenty sites.
Comet Ridge’s response to DCCEEW will be submitted in the coming weeks which will support the technical analysis
from the original application submission made by the Company back in October 2023.
Comet Ridge has also been undertaking FEED activities of the planned gas development within PLA 1128, however
this cannot be finalised and construction activities cannot commence until environmental approvals are secured and
the PL is awarded.
3. Corporate Activities
a) CleanCo GSA
Comet Ridge and CleanCo Queensland Limited (CleanCo) have maintained regular dialogue over the last quarter
regarding CleanCo’s requirements for the timing and volume of gas to be supplied under the Gas Sales Agreement
(GSA). The GSA was executed in September 2023 and has two remaining conditions to be satisfied, being satisfactory
finance and transport arrangements. These arrangements require a final investment decision (FID) which cannot be
finalised until EPBC approval is received for Mahalo North (PLA 1128) and the PL awarded. Comet Ridge and CleanCo
have therefore agreed to extend the timeframe for satisfaction of the remaining conditions to 30 June 2025.
b) Data Room Process
Comet Ridge continued to engage with third parties in relation to a range of possible transactionsfrom project funding,
infrastructure access, additional gas supply and prepayment through to sale of project equity and corporate level
transactions. Whilst due diligence activities and discussions continue to be productive, the discussions are incomplete
and confidential and there is no guarantee that a final proposal will be received, or received on commercially
acceptable terms, or that any transaction will eventuate.
c) Cash Position and Debt Facilities
At 30 September 2024, Comet Ridge had $11.4 million cash on hand (unaudited). Expenditure during the quarter
included $1.2 million of additional costs compared to prior quarters for Mahalo East (initial pilot costs incurred prior
to receipt of any grant funds) and Mahalo JV costs. It is expected expenditure in the December 2024 quarter will be
consistent with prior quarters (assuming Mahalo East grant funds are received as expected). The initial grant funding
payments are expected to be received in November.
d) Payments to Related Parties
The aggregate value of payments to related parties and their associates of $251k for the September 2024 quarter
(shown in item 6.1 of the attached Quarterly Cashflow Report) relates to the salary of the Managing Director and fees
paid to Directors (including PAYG and superannuation payments made on their behalf).
e) Shares and Performance Rights
The total number of securities on issue at the date of this report is:
• Ordinary shares: 1,110,524,434 (following conversion of 2,723,000 rights due to the satisfaction of
performance hurdles);
• Performance rights: Nil (following lapse of 1,167,000 rights and conversion of 2,723,000 rights to ordinary
shares); and
• Warrants: 62,121,212 (no change during the September quarter).
