Vintage Energy cements gas sales agreement with AGL, triggers first two pre-payments

Vintage Energy (ASX: VEN) and its Vali field joint venture partners have fulfilled all the conditions under a gas sales agreement with AGL – enabling the joint venture to call on the first two of three $5 million pre-payments from AGL under the deal.

The first two $5 million pre-payments will be used to fund capital works at the Vali field in the Cooper Basin to bring it to first gas.

Vintage managing director Neil Gibbons said locking-in the gas sales agreement had taken the company to a “significant point in its history”.

“Through this agreement, and the field work that has now commenced, we expect to be generating our first revenue and operating cash flow in the near future,” he said.

“We are fully-funded for the work to be done and are concentrating our efforts on completing the construction and connection work program safely and efficiently.”

Developing Vali gas field

Vintage owns 50% and is operator of the Vali gas field, while joint venture partners Metgasco (ASX: MEL) and Bridgeport hold 25% each.

The joint venture executed the gas sales agreement with AGL last month, which was a reflection of a heads of agreement between the parties that was signed late last year.

Under the agreement, AGL will purchase between 9 petajoules of gas and 16PJ (gross) at prices that will be a mixture of fixed and variable market rates.

AGL will purchase the gas through to the end of 2026.

“AGL was the most competitive bidder for Vali gas and has consistently demonstrated its willingness to encourage new gas supply for eastern Australia,” Mr Gibbins said.

“ willingness to pre-pay a portion of the contract volume will expedite first gas flows from the field,” he added.

Earlier this month, a fracture stimulation campaign begun at the field and is targeting the Patchawarra formation that intersects multiple zones of the Vali-2 and Vali-3 wells.

First gas from the Vali field is targeted for mid-year.