Vintage Energy (ASX: VEN) is another step closer to supplying gas for Australia’s east coast market after announcing independently certified 2P gas reserves for its Vali field in Queensland’s Cooper-Eromanga Basin.
The explorer has revealed estimated gross 2P (proved and probable) reserves for the Patchawarra formation of 30.3 billion cubic feet, which equates to 33.2 petajoules of gas.
This is the first reserves booking for Vintage and supports the commercial pathway of the Vali gas field including the planned connection into the Moomba gas gathering network.
It is also important to note that while the reserves certification was for the Patchawarra formation reservoir only, the Vali-1 ST-1 well also discovered stacked gas pay in the Nappamerri and Toolachee formations.
In an announcement to the market, Vintage said it is hopeful that gas produced from the Vali field will be “much greater” than the 2P figure estimated, with “upside to potentially come from stacked reservoirs, including the shallower Nappamerri group and Toolachee formation”.
“This independent verification is a key piece that will allow us to confidently move forward with the connection of the Vali gas field into Moomba,” Vintage managing director Neil Gibbins said.
“We made it very clear from the outset that we wanted to become a gas producer and sell our gas into the Australian east coast domestic gas market, and I am extremely proud that we will soon be delivering on this major strategic goal,” he added.
In a separate announcement today, Vintage told the market it has now placed the shortfall shares from its recent entitlement offer, which will provide the company with a further $3.2 million to advance its projects.
Vali field reserves
The 2P reserves estimate was reported by independent assessor ERC Equipoise following a recently completed rigorous review of the Vali gas discovery and subsequent flow test results.
The report also estimated 1P (proven) reserves for the Patchawarra formation of 12.3 Bcf, or 13.4 PJ, and 3P (proved, probable and possible) reserves of 78.9 Bcf, or 86.6 PJ gas.
The Vali field is located within Queensland permit ATP 2021 and is 50% owned and operated by Vintage in joint venture with Metgasco (ASX: MEL) and private company Bridgeport, which each hold 25% stakes.
Stacked gas pay was discovered at the Vali-1 ST-1 well in January and the well was fracture stimulated and tested from late July to early August. Extended flow testing successfully produced a strong and stable gas flow rate of 4.3 million cubic feet per day through a 36/64-inch choke at a 942 pounds per square inch (psi) wellhead pressure.
Vali development plan
A development concept has been completed for the Vali field which includes up to eight vertical fracture stimulated wells in addition to the existing Vali-1 ST-1 well.
“We have demonstrated our capability as an operator and, thanks to our excellent in-house technical team with a wealth of experience in the Cooper Basin, we look forward to adding to this discovery with a number of further leads and prospects identified for drilling in the area,” Mr Gibbins said.
Vintage’s plan is to drill, complete and fracture stimulate the remaining wells at a rate of one to two wells per year and tie them in to the Moomba gathering system via a 13km pipeline to the Santos (ASX: STO) operated Beckler field.
Development is currently at front end engineering and design (FEED) stage with the installation of the flowline and first production planned for the first half of 2021.
Supplying gas for the east coast domestic market
Vintage only listed on the ASX two years ago and in just over one year, it has progressed the Vali gas project from farm-in to discovery, successful testing and now booked reserves.
The company was formed by experienced alumni of Australian oil and gas major Beach Energy (ASX: BPT) at a time when gas prices had reached high levels and there were serious concerns of a significant gas shortage by the mid-2020s.
The threat remains with the Australian Energy Market Operator (AEMO) recently forecasting “potential supply gaps during peak winter days from 2024” due to operational constraints including depleted reserves and a lack of new developments.
Mr Gibbins said the timing of production from the Vali gas field next year “could not be better”.
“To further enhance what we believe will be a highly profitable gas field, we are seeing a strengthening of the domestic spot east coast gas price, which is in part driven by the recovery of the global LNG market,” he said.
Placement of shortfall shares
Vintage today announced the shortfall shares from its partially underwritten non‐renounceable entitlement offer have now been placed. The shortfall from the offer consisted of more than 52 million shares at $0.06 per share, which will contribute around $3.2 million (excluding costs).
Vintage is planning to use to the funds to advance its two potential production and cash-generating projects – the Vali field pipeline connection to the Moomba gas network, and the testing of the Nangwarry carbon dioxide discovery.
Funds are also earmarked for drilling further wells at the Vali field, as well as drilling the nearby Odin prospect.
“I have great confidence that we will soon be generating first production and cash flow for Vintage,” Mr Gibbins said.
“This has all happened in quick time and I am delighted that all the hard work of the team will finally be rewarded as we move forward and utilise the funds raised to execute these key projects.”