Vintage Energy charts growth path with lessons from Cooper Basin success

Vintage Energy (ASX: VEN) is set to benefit from lessons learned in the company’s relatively young life to achieve its potential in 2025, according to chair Reg Nelson.

The highly respected oil and gas veteran told shareholders at Vintage’s annual general meeting (AGM) that the company has the assets and determination to take advantage of its position in the prolific Cooper Basin in central Australia.

Mr Nelson reminded shareholders that Vintage was formed to find and supply gas to an east coast Australian energy market facing dwindling supply from 2020 onwards.

Increased gas sales

“The main game, of course, is increasing cash generation through gas production from our existing wells and connecting more of our gas reserves to market,” he told the AGM.

“The work conducted in September—connecting Odin-2 and optimising production at Odin-1—has been reflected in increased gas sales for the month.”

“More substantial production and revenue growth can be realised through drilling and connecting additional appraisal production wells in our gas fields and the successful drilling of low-risk oil targets.”

Small fraction accessed

Mr Nelson said Vintage’s operations are so far only accessing a small fraction of the reserves identified at Odin and Vali.

“Our task this year is to assimilate and analyse the lessons of the current appraisal operations so the optimal avenue to realise the full potential of these fields can be achieved.”

Vintage is currently supplying gas under long-term contracts from Odin and Vali and, as at 30 June, had around 71 petajoules of 2P sales gas reserves.

“We are still at the early stages of life for these fields as gas producers; appraisal production through which an understanding of their reservoirs, production characteristics, and the intricacies of their gas- and fluid-bearing zones is being acquired.”

Lessons learned

Mr Nelson, a former managing director of high-profile Beach Energy (ASX: BPT), told the AGM he has been involved in the drilling of over 500 wells in the Cooper and Eromanga Basins and has learned many lessons, three of which he believes are particularly relevant to Vintage’s current position.

“First, complexity and surprise are to be expected.”

“Second, there are no shortcuts in appraisal—it is an investment made by way of an iterative process of analysis, modelling, solution design, performance monitoring and re-evaluation.”

“Sometimes this can be frustrating and even disappointing but it leads to the third point I would highlight: the Cooper Basin is an excellent and financially rewarding location for gas and oil exploration and development.”

“Its features include proximity to existing gas gathering and processing facilities, access to markets keenly seeking and placing a high value on new supply and an understanding of prospectivity accumulated over 61 years from the first gas discovery at Gidgealpa-2.”

Strong position

He highlighted the strong position Vintage is already in, pointing out that more than 60 of the company’s 71PJ sales gas reserves are uncontracted.

“That is over 60 million gigajoules of an essential commodity—to put this into the context of the current market, we estimate an indicative price range of $10/GJ to $15/GJ for term contracts.”

“Realising value for shareholders from this position has been the core concern of the board and management since discovering Vali and Odin in 2020 and 2021,” he told those present.

“While it was never our expectation that the full potential would be realised by 2025, we did expect to be further advanced than is currently the case.”