Vintage Energy sets sights on increased gas production at Odin with $8m capital raise

Vintage Energy (ASX: VEN) is raising $8 million to help bring in new gas production from the Odin gas field in the Cooper Basin at a time when reports are calling for new supplies to an energy-hungry east coast.

The capital raising is made up of a $1.3m institutional investor private placement and a $6.7m accelerated non-renounceable entitlement offer.

The entitlement offer is to be conducted through two phases, with the offer price of $0.01 per share representing a 37.5% discount to the last closing price of $0.016 on 22 March 2024, a 40.3% discount to the 15-day volume-weighted average price of $0.0167 and a 23.8% discount to the theoretical ex-rights price of $0.0131.

Two-well program

Vintage will utilise the new capital raised to fund the drilling of two appraisal wells in the Odin field where it successfully commenced gas production from the Odin-1 well in mid-September 2023.

All gas currently produced from Odin-1 is supplying Pelican Point Power (a joint venture (JV) of ENGIE and Mitsui) under a sales agreement extending to December 2026.

With a growing gas sales contract and strong gas demand opportunities on the east coast, Vintage is now preparing to drill the Odin-2 and Odin-3 appraisal wells.

Vintage and its JV partners in Odin are exempt from the government’s $12 per gigajoule price cap.

Ready to bring on stream

Managing director Neil Gibbins said that, if drilling is successful, the company will complete and connect one of the wells to Pelican Point.

“This capital raising will enable Vintage to push on to increase gas production and cash generation from the Odin gas field,” Mr Gibbins said.

“Odin-1 has performed well since coming online and we are keen to replicate this and increase sales under the supply contract we hold with Pelican Point Power by stepping up production from the field.”

“We foresee a near-term impact. We are ready to drill, with a rig contracted and the expectation that a successful outcome could see gas flowing from a new Odin well by July this year.”

“We anticipate cash generated in this scenario will take Odin into a self-sufficient cash-generating operation.”

“Our existing contract and Odin’s performance to date present a compelling proposition for expansion of the field’s productive capability and its cash generation.”

100% success rate

The Vintage Energy operation has a 100% drilling success rate to date at Odin and the nearby Vali field.

Mr Gibbins said the Vintage board had considered a number of options to best fund the Odin appraisal drilling, including debt funding and concluded this equity capital raising was the most appropriate way to proceed given the current stage of the Odin field.

“It is consistent with market practice and reduces risk,” he concluded.