ConocoPhillips says it finds gas offshore Australia

ConocoPhillips announced a gas discovery off southeastern Australia, its maiden exploration drilling in the region, with wireline logs indicating gas columns across two targets. This encouraging find, the first in four years, aims to prove a large gas resource to supply Australia's east coast market, which faces projected shortages by the late 2020s. Junior partner 3D Energi saw its shares surge almost 35% on the news, reflecting the market's positive reaction to potential new supply.

Analysis

ConocoPhillips (COP) has announced a significant gas discovery off southeastern Australia, marking its maiden exploration drilling in the region since November 1. Wireline logs confirmed gas columns across two targets, representing the first such find in the area in four years. This initial success immediately boosted junior partner 3D Energi (TDO) shares by nearly 35% to A$0.16, reflecting strong market optimism and a strongly positive sentiment (0.75).

The discovery is strategically vital, aiming to prove a large gas resource to address projected material shortages in Australia's east coast market by the late 2020s. ConocoPhillips, which previously divested from the Darwin LNG project, is now actively pursuing domestic supply solutions, potentially mitigating future export control risks on its Australia Pacific LNG operations. The company plans further drilling, with a second exploration well in December and a total of six wells across two permits.

This find provides a positive outlook for regional energy security and ConocoPhillips's long-term Australian portfolio, aligning with themes of Energy Markets & Prices and Corporate Guidance & Outlook. While the initial results are encouraging, the commercial viability and scale of the resource still need to be fully proven through subsequent drilling and appraisal. The partnership with 3D Energi and Korea National Oil Company underscores a collaborative effort to unlock new supply for a critical market.

Key Decisions for Investors

• Investors should closely monitor ConocoPhillips's ongoing exploration campaign, particularly the results from the second well, to confirm the commercial viability and scale of the gas resource.
• Evaluate the sustainability of 3D Energi's share price surge, as future drilling results and resource certification will be critical determinants of long-term value.
• Consider the broader implications for Australia's east coast energy market, as a proven large gas resource could significantly impact domestic supply, pricing, and regulatory dynamics.