Vintage Energy’s Odin wells boost gas production ahead of proposed Galilee Energy merger
Vintage Energy (ASX: VEN) is set to ramp up its gas production in central Australia following a successful quarter of well commissioning, workovers and reserves upgrades that saw both the Odin-1 and new Odin-2 wells flowing gas simultaneously subsequent to the end of the quarter.
Odin-1 was taken offline briefly due to commissioning requirements before being brought back into production, while Odin-2 was commissioned for production in mid-October after wet-weather-induced delays.
The two wells are now supplying gas to the Pelican Point power station under a long-term contract.
Reserves upgrade
The company’s annual statement of reserves and resources released at the end of September incorporated an independent assessment of the Vali and Odin gas fields in the Cooper Basin.
This assessment provided an inaugural classification of overall proved reserves, along with proved and probable reserves for the Odin gas field.
Vintage’s net 2P reserves at Odin are estimated to be 4 million barrels of oil equivalent (MMboe), including 22.4 petajoules of sales gas and ethane.
The company’s net proved reserves jumped 55% to 6.3MMboe, largely due to the conversion of contingent resources to reserves attributable to Odin.
Proposed merger
The company also made a significant corporate move during the quarter with signing of heads of agreement with well-regarded onshore gas explorer and developer Galilee Energy (ASX: GLL) for a proposed merger of the two companies,
“Looking to the future, the heads of agreement signed in August for the merger of Vintage Energy and Galilee Energy has set a path for Vintage to upgrade its capacity to address the east coast gas opportunity, starting with our Cooper Basin gas projects,” Mr Gibbins said.
“We are working with the team at Galilee to take the merger to reality in the coming months.”
The two companies believe the merger will result in a financially stronger, better-resourced company to capitalise on the favourable market outlook for gas supply to eastern Australia.
Improved balance sheet
The merged entity’s improved financial position is expected to be positive for Vintage’s gas projects in the Cooper Basin whilst also possessing the long term potential of the substantial Galilee Basin contingent gas resource brought by Galilee’s portfolio.
A binding scheme implementation deed for the merger was signed and announced subsequent to the end of the quarter, with an indicative timetable foreshadowing a meeting for Galilee holders to consider and vote on the scheme in December 2025.
Subject to the satisfaction of necessary conditions, the indicative timetable suggested implementation could occur between December 2024 and January 2025.