Metgasco Signs Gas Sales Agreement with AGL to Generate Inaugural Cash Flow from Vali in Mid-Year 22


Metgasco reached an important milestone with the ATP 2021 joint venture signing a definitive gas sales agreement with AGL Wholesale Gas.

Cash flow from gas sales could begin by the middle of this year under the deal, which sees AGL buying between 9 petajoules and 16 PJ of gas – the entire production from the field of Vali from the start of the field until the end of 2026.

Pricing includes a combination of fixed and variable market rates and the agreement includes a gross prepayment of $15 million ($3.75 million net to MEL) by AGL to the joint venture in three tranches to fund work to bring Vali to the first gas. The first installment of prepayment must be made upon signature of the GSA and satisfaction of its conditions precedent which include the execution of the upstream transport and processing agreements.

Metgasco (ASX:MEL)which owns 25% of ATP 2021, said production is expected to begin after the field’s three wells are completed and connected to the nearby Moomba gas gathering network.

“Executing the GSA with AGL is an important milestone for Metgasco and underpins our transition to becoming a gas producer in mid-CY2022,” Chief Executive Ken Aitken said.

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

“The GSA to sell up to 16 PJ of gas to AGL will provide significant cash flow to the joint venture over the life of the contract and will provide the joint venture with an upfront payment for funding the capital works required to realize the first gas .”

He added that strengthening gas prices in domestic and international markets meant that its Cooper Basin production center was a very valuable asset to Metgasco.

“It is important to note that field reserve definition and near-term development still awaits our nearby PRL211 asset, with the ATP2021 and PRL211 gas production hub well positioned to sell larger volumes of gas to the future and be part of the solution to provide new gas supply to the limited East Coast gas market.

Vali gas field

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

This allowed the joint venture to independently certify a proven and probable reserve of 101 PJ for the field (25.2 PJ net to Metgasco).

Early production performance should provide the joint venture with a better understanding of the field’s potential and help determine optimal future evaluation and development plans.

This article was developed in conjunction with Metgasco, a Stockhead advertiser at the time of publication.

This article does not constitute advice on financial products. You should consider obtaining independent advice before making any financial decisions.

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