State Gas Limited (ASX:GAS) is a junior energy producer and explorer with assets concentrated in the Bowen Basin, Queensland. The Rolleston West CNG Project (RW-CNG) in the Bowen Basin has achieved mechanical completion and with the dewatering of the Rougemont-2/3 well, commissioning is well underway. With a supply contract now signed, the company is targeting first deliveries from mid-April. Notwithstanding rain delays, the project has come in broadly to plan. The facility will be ramped up to an initial output rate of 0.5-0.75TJd in line with well production and as additional offtake agreements are secured. We believe the plant has upside capacity of up to 1.7TJd as future wells are added into the network. Whilst somewhat modest, the resultant cashflows could fund initial appraisal and evaluation works, particularly converting contingent gas to bankable reserves. First gas is always a critical event driver in demonstrating the commercial potential of the assets and providing a growth platform. We expect the company to return to drilling in 2024 to provide additional production capacity to boost RW-CNG output. Although industry macro-drivers highlight a continuing gas supply squeeze and rising prices, progress on new developments has been slow. In this regard GAS has taken an important first mover advantage in the transition from explorer to producer – cashflow is cashflow and initial production provides a quasi-commissioning blueprint for next phase and scale-up opportunities. The company’s assets are positively located within a transmission pipeline network with adjacent production analogues highlighting what appears to be the relatively low operating and commercial risk. The company holds a material net 2C contingent resource base of more than 500 PJ and the strategy to convert resources into reserves and build production at scale appears firmly under way.