Overview
Central Petroleum Limited (ASX: CTP) (“Central”) and its Mereenie and Palm Valley Joint Venture partners (collectively “JVs”) have entered into a binding Letter of Intent (“LOI”) with the Northern Territory’s Power and Water Corporation (“PWC”) to:
- support the immediate commencement of early works for an accelerated drilling program for four new wells; and
- promptly document and execute gas supply agreements consistent with conditional gas supply term sheets that will see uncontracted firm gas production from Mereenie and Palm Valley of up to 25.5 PJ (Central share) sold through the end of 2034.
Drilling Program Early Works
The JVs will immediately begin early works for a four-well drilling program. This includes activities such as ordering long-lead items, progressing civil works, and selecting a drilling rig. The program will involve drilling two wells at Mereenie and another two at Palm Valley, with drilling targeted to commence in mid-2026.
Gas Supply Arrangements
The JVs and PWC have finalised ‘in-principle’ terms for long-term, firm gas supply under term sheets covering uncontracted firm gas production at market pricing from the Mereenie and Palm Valley fields of up to 25.5 PJ (Central share) through the end of 2034, which includes additional production from the four-well program. The gas supply term sheets are non-binding and conditional, requiring final internal approvals from each JV participant and PWC.
The intention is for the parties to formalise and execute binding Gas Sale Agreements (“GSAs”), consistent with these term sheets, by 20 February 2026. Arrangements have been agreed under the LOI where the JVs can be reimbursed by PWC for costs associated with the drilling program’s early works in the event binding GSAs are not executed by 20 February 2026.
Project Readiness
The intended supply arrangements are designed to quickly deliver significant new gas volumes to the Northern Territory, while also enhancing gas supply security for customers throughout the region. Preparations for the new wells are already well-advanced, with key approvals in place or underway. By initiating the drilling program’s early works now, the JVs can target mid-2026 for the commencement of drilling. The additional gas production can be quickly supplied to the market after drilling, as the wells will utilise available production capacity at the existing Mereenie and Palm Valley gas fields.
Central, via subsidiaries, has a 25% interest in the Mereenie field, along with other Mereenie JV participants (Echelon Mereenie Pty Limited, Horizon Australia Energy Pty Ltd, and Cue Mereenie Pty Ltd) and a 50% interest in the Palm Valley field, with other JV partners (Echelon Palm Valley Pty Limited and Cue Palm Valley Pty Ltd ).
Source: Central Petroleum Announcement
