CENTRAL Petroleum has signed an agreement for an undisclosed sum with Macquarie Bank to deliver 5.2 petajoules of pre-paid gas over three years to either the Ballera or Moomba processing facilities – both of which are operated by Santos.
The agreement also gives Macquarie an option to purchase up to two years of further gas sales at an agreed future price amounting to about 3.5 petajoules of additional gas sales, with the consideration being paid on delivery.
The gas can be delivered from either the Dingo, Palm Valley or Mereenie fields, with supply to start when the Northern Gas Pipeline commences operations, or otherwise no later than 1 January 2019.
Central said the deal had enabled it to fully fund the deferred $10 million purchase price of the Mereenie oil and gas field, which it completed in early June.
The company also removed its exposure to the Mereenie production bonus obligation, which would have cost the Mereenie joint venture up to $17.5 million, depending on production.
Central chief executive Richard Cottee said removing that exposure could save the company between $2.5 million and $8.75 million in cash payments, depending on the average rate of production at Mereenie.
“Given Central’s market for gas will include the east coast from 2018, and the potential for an increase in Mereenie’s gas reserves, the company sees value in removing the Mereenie production bonus exposure at a discounted price now,” he said.
“Ultimately it eliminates another economic impediment to the efficient commercialisation of our producing gas fields.”
“The ability to repay the pre-purchase gas sale through a financial settlement over a number of years after 2018 gives the parties the flexibility to avoid having to conclude a gas transportation agreement by any particular time,” he added.
Mr Cottee said that the amount being sold under the agreement was a small portion of the available reserves and would not affect the volume of gas that Central was currently marketing to the east coast.