Tetragon Energy’s Hunt for Huge Gas Discoveries in the Philippines

We were pleased to have the opportunity to speak with Conrad Todd, Managing Director of energy explorer Tetragon Energy (ASX:TET) for the first time this week.

The company began trading in July, so it’s still under the radar. But for a current market capitalisation of around A$11m, there's a lot under the hood…

• Tetragon controls a portfolio of offshore and onshore licences in the Philippines with existing gas discoveries, large exploration targets, a clear technical work programme, and a potential pathway to bring in larger partners over time.

That last part is key.

Tetragon doesn’t necessarily plan to fund major offshore gas development from its own balance sheet. Instead, its focus is on de-risking its assets, improving its technical case, and increasing the chances of attracting partners on the best terms possible.

For a small company, that stands to be a very attractive route to value creation.

Watch our interview in full here

Why the Philippines?

One of Conrad’s key points when we spoke was the energy backdrop at the heart of Tetragon.

The Philippines is energy constrained. It’s looking to increase domestic gas production, reduce its reliance on imported LNG, and replace part of its coal-fired power generation with gas.

As you’d imagine, that creates an attractive backdrop for companies with domestic gas exposure.

According toTetragon’s presentation, Philippine domestic gas pricing is linked to imported LNG, with domestic gas prices of around A$18/MCF. The company also points to a supportive government backdrop, with energy security now a national priority.

• To us, the key takeaway is that Tetragon’s assets aren’t just technically interesting; they also sit in a country where they're strategically valuable.

The Opportunity Offshore

Tetragon’s flagship focus is currently offshore.

The company operates licences SC-80 and 81 in the Sulu Sea, where it holds a 37.5% interest. These permits already contain two gas discoveries, Palendag and Dabakan, with gross 2C contingent resources of around 470 Bcf of gas, plus condensate.

That’s a strong starting point, but the bigger opportunity may be the exploration upside.

The offshore acreage sits in the Circum-Borneo hydrocarbon province, a region with major gas and oil discoveries in surrounding basins—you can see it below. Tetragon believes the permits contain basin-floor fan targets resembling large discoveries seen around wider Asia and beyond.

Among the most important pieces of near-term work is seismic reprocessing.

Tetragon has awarded a contract to reprocess four existing 3D seismic surveys covering more than 4,000km2 across SC-80 and SC-81.

Fast-track products are expected in around six months, with the final processed dataset expected in around 12 months. And the results will be used to sharpen the prospect inventory, refine the resource picture and support discussions with potential farm-in partners.

That's partnerting point is key:

• Deepwater wells tend to cost a lot of money, and Conrad was clear in our interview that Tetragon and its current partners won’t be writing those cheques alone. The goal is to build the case, improve the asset’s “saleability” and bring in the right partner before drilling.

Moving Onshore

Moving on, and Tetragon’s onshore licence, SC-82, provides a different style of opportunity.

The 100%-owned permit, seen below, is located around 250km north of Manila and contains the Nassiping-2 gas discovery, with gross 2C contingent resources of around 13 Bcf.

While smaller than the offshore resources, this could be more practical for a junior.

Conrad described it to us as a possible gas-to-power opportunity. After all, the discovery has previously produced gas, and a high-voltage power line is located less than a kilometre from where Tetragon could drill.

A future onshore appraisal well would also be much cheaper than a deepwater offshore well.

• To sum up, SC-80 and SC-81 provide the bigger blue-sky upside, while SC-82 could offer a more manageable route to domestic gas production if the technical work supports it.

What Comes Next

Tetragon raised A$4m at IPO, giving it funding for the current technical programme. But the real potential points of value creation and growth in market awareness are likely to come from progress on the assets themselves.

• The next milestones include resource updates, fast-track seismic results, further interpretation, farm-out discussions, work on SC-82 and, longer term, well planning ahead of a potential first spud.

In our view, the bigger picture is deal potential.

If Tetragon can keep de-risking the licences, each step forward could increase the chances of a farm-out, carry, asset sale or wider corporate interest—and potentially improve the value of any such deal.

That’s still early-stage and high-risk.

But with a modest market cap, existing discoveries, large offshore targets and a clear pathway to technical catalysts, we believe Tetragon is well worth putting on the watch list.

Again, you can watch our full interview with Managing Director Conrad Todd here.