Metgasco, JV partners win over AGL for a taste of Vali gas
Metgasco and its joint venture partners are a step closer to commercialising their Vali gas field in Queensland after reaching a conditional Heads of Agreement(HoA) with AGL Wholesale Gas. The HoA includes a gross $15million payment to the Vali Joint Venture(net MEL $3.75M) to assist with Vali project funding
The Vali Field JV(Metgasco 25%) and AGL will seek to execute a formal agreement by the end of 2021 covering the sale of all gas from the Vali field from start-up – expected in mid-2022 – through to the end of 2026.
Metgasco (ASX:MEL) expects total gross gas sales during the period of the 4.5 year contract would range from 9 petajoules to 16PJ on a mix of firm and variable pricing.
With gas supplies on Australia’s east coast expected to go into deficit at any moment, the AGL /Vali JV deal is a win/win for both parties as the Vali JV gain a pre-payment to assist project funding and a quality foundation customer with AGL securing up-to 16% of a new source of east coast gas for 4.5 years.
“I am extremely happy to announce the signing of a HoA with a quality customer such as AGL. This deal is a significant step forward in delivering Metgasco’s objective of becoming a gas producer in mid CY22,” managing director Ken Aitken said.
“The Heads of Agreement for the proposed sales of up to 16 PJ of gas to AGL will deliver significant cash flow to the Joint Venture over the term of the contract and also provide the Joint Venture with an upfront payment for funding capital works required to achieve first gas.
“These are great outcomes for Metgasco and all the participants in the agreement.”
He added the deal could be the “enabling catalyst” leading to the field’s commercialisation, allowing it to supply meaningful amounts of gas into the east coast market.
“With strengthening gas prices in the domestic and international markets, the Vali Field gas production hub will be a highly valuable asset for Metgasco and its shareholders for decades,” Mr Aitken said.
The HoA with AGL contains the key commercial terms to a fully termed gas sales agreement.
Significantly, it represents just 9% to 16% of the field’s proved and probable reserves of 101PJ (25.2PJ net to Metgasco).
The agreement also includes a number of conditions such as entering into raw gas processing agreement with the Moomba infrastructure owners for the processing of Vali gas to sales gas standard, which is currently underway.
This article was developed in collaboration with Metgasco, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.