ATP 2021 JV and AGL Wholesale sign gas sales agreement

SYDNEY, AUSTRALIA: Metgasco Ltd (ASX: MEL) announced a conditional Heads of Agreement (HoA) between the ATP 2021 Joint Venture parties (JV) and AGL Wholesale Gas Limited (AGL) for gas sales produced from the Vali Field from field start-up (mid-CY2022) through to the end of CY2026.

This is anticipated to be a minimum of 9 PJ and up to 16 PJ of gross gas sales over the contract term, to be sold on a mix of firm and variable pricing at market rates.

The terms set out in the HoA will form the basis of a fully termed Gas Sales Agreement (GSA) which will include AGL providing an upfront payment of $15 million to the JV in three tranches as the project moves to first gas, subject to execution of the GSA and satisfaction of its conditions precedent.

The JV funds will be used specifically for the Vali Field to fund the work program, including the completion of all three Vali wells and the tie-in of the Vali Field to the nearby Moomba pipeline network.

Metgasco Managing Director, Ken Aitken said, “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.’’

“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. Metgasco acknowledge the excellent commercial work done to date by Vintage’s team and advisors on securing this transaction.’’

“I believe this agreement is the enabling catalyst in the Vali gas field commercialisation process. Along with our recently announced three-fold upgrade in reserves for the Vali Field, which took the gross 2P reserves to 101.0 PJ (25.2 PJ net to Metgasco, or 25,250,000 GJ), we anticipate supplying meaningful amounts of gas into the Australian 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.’’

“We are excited to have AGL as a foundation gas buyer of Vali Field gas and look forward to providing AGL with a consistent supply of gas from the Vali Field over the next four to five years.”

A competitive process was undertaken for the sale of gas from the Vali Field. Each JV party has executed the HoA with AGL, which contains the key commercial terms to a fully termed GSA. This HoA provides the greatest amount of flexibility for the JV in terms of gas delivery at the strongest price and represents approximately 9% to 16% of the 2P reserves from the Vali Field as announced by Metgasco previously.

The HoA includes a number of conditions precedent to a definitive GSA including a condition that a raw gas processing agreement with the Moomba infrastructure owners, for the processing of Vali gas to sales gas standards, is entered into. Discussions with the Moomba infrastructure owners regarding a processing agreement are progressing. The HoA provides for an exclusivity period, during which time the formal documentation for a gas sales agreement is expected to be negotiated and executed.

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