Next week should bring two more Australian Securities Exchange listings in the oil and gas sector — Sino Australia Oil & Gas and Real Energy.

Both companies have a tentative listing date of December12, but the ASX is still to confirm where it can slot the companies into what is shaping up as a record month for IPO activity.

Real and Sino Australia will take the number of oil and gas IPOs in 2013 to seven. That is up from only four in the 2012 and three in 2011.

The total value of funds raised by oil and gas IPOs will be lower ($65 million in 2013 versus $96 million in 2012), but the previous year was dominated by the $75 million float of Armour Energy.

Sino Australia has raised $12.8 million to fund its China-based oil field services business, focused on enhanced oil recovery.

Real Energy is a Cooper-Eromanga Basin explorer chaired by industry veteran, Norman Zillman, who is hoping he can repeat the rags-to-riches success of Queensland Gas Company.

The executive team is led by Scott Brown, formerly CEO of Mosaic Oil, which was taken over by AGL in 2010 for $130 million.

Real had aspirations for an IPO as far back as 2011, but could not get sufficient investor support.

In a healthy sign of the improved sentiment towards petroleum stocks, Real managed this time around to secure BBY to fully underwrite a $10 million public issue.

Real’s flagship tenement, ATP 927P, is best described as a basin-centred, unconventional gas play.

The unconventional tag is a little misleading in that it conjures up thoughts of huge rigs drilling $20 million wells, and long and expensive development programs.

However, Real is a targeting tight sand packages at relatively shallow depths, and is confident it can achieve commercial flow rates from standard vertical wells, without fraccing.

The company is scheduled to begin a three-well program in the second quarter of next year with the aim of proving this concept.

Brown told Energy News the company was “very convinced we have a big basin-centred gas play in our permits”

The proven success of similar gas operations by the Santos-operated Cooper Basin Joint Venture immediately west of ATP 927P was a key reason behind Real’s confidence.

“Right next door to us Santos is active with gas operations,” Brown said. “They have conducted a 3D seismic survey and are looking to drill more wells particularly around the Whanto area.

“They have drilled vertical, unfracced wells that have achieved very good flow rates from the Patchawarra and Toolachee formations of between 2 million and 11 million cubic feet of gas per day. These are the same sections we will be targeting.

“On the other side of ATP 927P, Energy World has a couple of gas fields known as Cocos and Solitaire.”

Brown said the simplicity and relatively shallow depths of Real’s target had a number of advantages, including lower drilling costs, the potential for development without fraccing, lower carbon dioxide content and an increased possibility of condensate.

He said the company was not going to be doing as much scientific work as Beach or Senex because “we know all the wells in a good radius have all had significant flow rates or gas in the Permian section.

“And unlike shale gas, basin-centred gas is a sand package. The Patchawarra and Toolachee formations are relatively easy to get gas out of compared to a shale sequence, where you need to have lot of science about how your frac it, the orientation of the wells, and so on.”

Brown said this simplicity translated into relatively low cost and quick development times, compared to other unconventional gas projects.

“The first three wells will be proof of concept,” he said.

“I am sure we will then get a lot of people that might want to partner with us once we can show they flow at really good rates.”

The independent geologist’s report in Real’s prospectus has a best estimate of basin-centred gas in place of 10.2 trillion cubic feet across the company’s three permits, with another 9.5TcF of shale gas.

If Real can bring its basin-centred gas to market in a short time frame, it could be a meaningful new source for the eastern states gas market, just as it heads for a supply crunch between 2015 and 2017.

Zillman and Brown know that smaller players in the Cooper Basin usually end up as takeover targets for the region’s heavyweights, but that would be a happy outcome at the right price.

With Brown, non-executive chairman Lan Nguyen (also ex-Mosaic) and Zillman holding 28% of the company after the IPO and with options over another 10%, the trio is in a position to control the destiny of their new company.