Horizon Oil (ASX: HZN) and joint venture partners Echelon Resources (ASX: ECH) and Central Petroleum (ASX: CTP) have entered into a binding agreement with the Northern Territory’s Power and Water Corporation (PWC) to support an accelerated drilling program for four new wells and execute agreements for the sale of gas from the Mereenie and Palm Valley fields through to the end of 2034.
Those involved expect the deal to significantly increase conventional gas output from the Amadeus Basin and help address current supply constraints threatening power system reliability in the NT.
It will aim to quickly deliver significant new gas volumes to the region — equivalent to over 20% of the Territory’s total demand — while enhancing gas supply security for customers.
Mereenie permits OL4/OL5 are owned by Central Petroleum (25% equity and operator status), Echelon (42.5%), Horizon (25%), and private company Cue (7.5%), while Central Petroleum holds 50% equity in and operates Palm Valley permit OL3 are, partnered by Echelon (35%) and Cue (15%).
Early Drilling Works
The agreement includes the firm supply of up to 19.1 petajoules (net to Echelon) and up to 25.5PJ (Central’s share) from existing production, along with the drilling of two new wells at Mereenie and two at Palm Valley.
The partners will immediately begin early works for the drilling program including the ordering of long-lead items, progressing civil works and selecting a suitable rig.
They intend to formalise and execute binding gas sale agreements early in the new year, with drilling targeted to commence in mid-2026.
Arrangements have been made under the initial agreement whereby Horizon, Echelon, and Central can be reimbursed by PWC for costs associated with the drilling program’s early works in the event that gas sales agreements are not executed by February.
Unlocking Reliable Supply
Horizon chief executive officer Richard Beament said the PWC agreement was a major step in unlocking additional, reliable gas supply for the Northern Territory and increasing production from the Amadeus Basin.
“By commencing early works now and targeting drilling for mid-2026, we can bring new Mereenie volumes to market quickly using existing field capacity,” he said.
“Formalising long-term gas sales agreements consistent with the in-principle term sheets will underpin supply through to 2034, supporting the Territory’s gas demand from the middle of next year.”
Substantial Commitment
Central chief executive officer Leon Devaney said the agreement signified a substantial commitment by the joint venture partners and PWC to rapidly increase gas supply from Amadeus.
“Gas production from the Basin is sourced from conventional fields, underpinned by proven reserves and a strong track record of reliability, which is essential for Northern Territory customers who depend on a steady supply of gas for affordable and efficient energy,” he said.
“We look forward to working closely with PWC to deliver this significant gas sales agreement and an accelerated drilling program, with the shared goal of increasing gas supply and energy security for all Territorians.”
Near-Term Growth
Echelon chief executive officer Andrew Jefferies said the PWC deal represented “exciting, near-term growth” for the Mereenie and Palm Valley joint venture.
“Gas from Mereenie and Palm Valley has underpinned the Territory’s power system for the past 39 years and this agreement positions us to add even more locally-produced, reliable energy at a time when it is needed most,” he said.
“Gas is the keystone of the region’s energy system and this agreement is a real win-win for the joint venture, our shareholders, our hard-working employees, local stakeholders, the Territory government and residents.”
