With gas prices at near record highs, Vintage Energy (ASX: VEN) has completed a $10 million debt facility to assist with bringing the Vali field into production, which is targeted for late September or early October.
The debt facility with PURE Resources Fund was initially announced in November last year, and has now been completed, with funds available for draw down in two $5 million tranches.
This facility has a 48-month term, and starts with an 11% interest rate, which will reduce to 8.5% once certain operational cash flow conditions are met.
Developing Vali gas field
Vintage holds 50% of the Vali gas field in Queensland’s Cooper Basin, with joint venture partners Metgasco (ASX: MEL) and Bridgeport owning 25% each.
Field construction is expected to finish in September, with all wells to be online by mid-October. First gas is anticipated later that month.
Cash flow from Vali gas sales is expected in the first half of FY2023.
First gas sales are already under contract with AGL, which has agreed to make $15 million in pre-payments to assist with funding the Vali field’s development.
AGL has already made $10 million in pre-payments, with the final $5 million due shortly.
Under the arrangement, AGL will purchase between 9PJ and 16PJ of gas at a mix of fixed and variable market rates through to the end of 2026.
A well completion campaign is due to begin early next month at Vali-1 ST1, Vali-2, Vali-3 and Odin-1 wells over four-to-six weeks.
Acquisition of PRL 211
The Odin-1 well is located on neighbouring permit PRL211 in Queensland.
Beach Energy recently relinquished a 15% interest in the permit, which increased Vintage’s interest to 50%.
Similar to the Vali field permit, Metgasco and Bridgeport also have a 25% stake each.
Near record gas prices
Although down slightly this week, natural gas has been attracting near record prices due to sanctions placed on Russia following its invasion on the Ukraine earlier this year.
Natural gas is up almost 164% over the past 12 months and is currently attracting around US$8.5 per million British thermal units after exceeding US$9.7/MMBtu last week – its highest in 14 years.
Trading Economics predicts gas will be commanding around US$10.98/MMBtu in 12 months time. Meanwhile, the east coast of Australia, which is Vintage’s main market, is approaching crisis point.
If these forecasts materialise, Vintage will be beginning production at an opportune time.