Oil and gas explorer Vintage Energy (ASX: VEN) has announced it has signed a maiden gas sales agreement with the wholesale gas subsidiary of energy retailer AGL Energy (ASX: AGL) for the supply of gas produced from its Vali field in Queensland’s Cooper Basin.
Vintage, together with its ATP 2021 joint venture partners Metgasco (ASX: MEL) and private company Bridgeport (Cooper Basin) Pty Ltd, finalised the deal with AGL Wholesale Gas Limited with gas sales due to commence from field start-up (expected mid-year) through to the end of the 2026 calendar year. The total volume of contracted gas is estimated at between 9 and 16 petajoules (gross).
The terms of the gas sales agreement reflect a heads of agreement signed between the joint venture and AGL late last year.
These terms include the Vali joint venture receiving pre-payments totalling $15 million in three equal tranches from AGL on the achievement of milestones as the project moves to first gas. The funds are to be applied specifically to fund the work program to bring the gas field online.
The first pre-payment and commencement of the agreement is subject to the fulfilment of conditions precedent, which include the execution of upstream transportation and processing agreements.
Under the deal, gas produced during the production appraisal will be sold to AGL on a mix of firm and variable pricing at market rates.
In today’s announcement, Vintage managing director Neil Gibbins acknowledged AGL as the most competitive bidder for Vali’s gas.
“AGL has consistently demonstrated its willingness to encourage new gas supply for eastern Australia. Its willingness to pre-pay a portion of the contract volume will expedite first gas flows from the field,” he said.
Vintage, as 50% owner and project operator, confirmed it is fully funded for capital expenditure at Vali through to first cash flow.
Secures up to 16% of field’s reserves
Mr Gibbins has described the signing of the maiden gas sales agreement as a milestone achievement.
“Vintage Energy now has the gas sales agreement, finance and reserves in place to commence revenue generation in the near future. We are intent on completing the supporting agreements and field work to enable gas flows to commence by our mid-year target time,” he said.
According to Mr Gibbins, the volume contracted under the deal represents between 9-16% of the field’s announced proven and probable reserves of 101 PJ of gas.
“We expect Vali and adjacent resources, such as our Odin discovery, will supply greater volumes of gas to eastern Australia in the coming years, subject to the lessons acquired during appraisal of initial production performance from the field,” he added.
Vali gas project update
In today’s announcement, Vintage said capital works for the start of production from Vali remain on track for first gas around mid-year 2022.
Site works at the project have begun in preparation for the conduct of operations later this month.
Vintage holds a 50% operating stake in the ATP 2021, the Queensland exploration permit covering the Vali gas field. Its joint venture partners Metgasco and Bridgeport each hold 25% interests.