Metgasco has reached a major milestone with the ATP 2021 joint venture executing a definitive gas sales agreement with AGL Wholesale Gas.

Cash flow from the sale of gas could begin by the middle of this year under the agreement, which sees AGL buying between 9 petajoules and 16PJ of gas – the entire production of the Vali field from field start-up through to the end of 2026.

Pricing includes a mix of fixed and variable market rates and the deal includes a gross $15m pre-payment(net $3.75m to MEL) by AGL to the joint venture in three tranches to fund the work to take Vali to first gas. The first pre-payment tranche is to be made on signing of the GSA and satisfaction of its conditions precedent which include execution of upstream transportation and processing agreements.

Metgasco (ASX:MEL), which holds 25% of ATP 2021, said production is expected to begin following completion of the field’s three wells and connection to the nearby Moomba gas gathering network.

“The execution of the GSA with AGL is a significant milestone for Metgasco and underpins our transition to becoming a gas producer in mid-CY2022,” managing director Ken Aitken said.

“Commercialisation of Vali represents the culmination of a long process of value creation by Metgasco, from initial application for ATP2021, technical appraisal, farm-out and, with our partners, a highly successful exploration drilling program.

“The GSA to sell up to 16 PJ of gas to AGL will deliver significant cash flow to the Joint Venture over the term of the contract and provide the Joint Venture with an upfront payment for funding capital works required to achieve first gas.”

He added that strengthening gas prices in the domestic and international markets meant that its Cooper Basin production hub was a highly valuable asset for Metgasco.

“Importantly, field reserves definition and near term development still await for our nearby PRL211 asset, with the ATP2021 and PRL211 gas production hub well positioned to sell greater volumes of gas in the future and be part of the solution to provide new gas supply to the constrained east coast gas market.”

Vali gas field

Metgasco and operator Vintage Energy (ASX:VEN) first discovered the Vali gas field in early 2020 with subsequent appraisal wells proving its ability to flow gas at commercial rates.

This allowed the JV to independently certified a proved and probable reserve of 101PJ for field (25.2PJ net to Metgasco).

Early production performance is expected to improve the JV’s understanding of the field’s potential and assist in determination of optimal future appraisal and development plans.

 

 

 

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.

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