Energy: These gas producers are locking in the rocking gas prices

While gas production is rising on both the east and west coasts of Australia, there are still concerns that demand will outstrip supply on the east.

And there’s a bunch of small cap gas producers having no trouble signing gas supply contracts.

Senex Energy (ASX:SXY) has agreed to supply Orora (ASX:ORA) with a further 9.9 petajoules (9.38 billion cubic feet) of gas over six years from 2022 to 2027, bringing the total contracted volume to 13.2 petajoules.

Gas for the agreement will be sourced from Project Atlas from the beginning of 2020.

“Expansion of the gas sales agreement is a further seal of approval for Project Atlas as we continue to de-risk the asset’s future revenue stream,” managing director Ian Davies said.

“Senex has contracted a significant portion of expected production from Project Atlas for 2020 and 2021, and more contracts continue to be negotiated.”

Likewise, Central Petroleum (ASX:CTP) and its partner in the Mereenie joint venture in the Northern Territory have reached a new gas sales agreement to supply up to 21.9 petajoules of gas over three years to major retailer AGL Energy.

This will commence from January 1, 2020 and features pricing that is expected to increase the company’s average portfolio gas price.

Central and its partner have also reached a package of commercial arrangements to support new investment in the Mereenie field production capacity to deliver gas to AGL as well as new gas sales into the east coast market.

“We have now locked in the strong price signals we have seen in the east coast through a fixed price, CPI escalated, three-year term [gas sales agreement] which will increase our average portfolio gas price,” managing director Leon Devaney said.

In other ASX energy news today:

Armour Energy (ASX:AJQ) has reconnected its Myall Creek #4 well in Queensland, which is currently producing 0.6 terajoules (570,000 cubic feet) of gas per day. Stimulation has also been completed on the Myall Creek #5 well with flowback and testing expected to start next week.