Vintage Energy Q2 Sales Revenue Soars 105% with Production Up 90%

Strong Revenue Growth Despite Operational Challenges

Vintage Energy’s quarterly report for the period ending 31 December 2024 reveals a notable turnaround in production and sales revenue. The company achieved $1.5 million in sales revenue, a 105% increase from the previous quarter, underpinned by a 90% rise in production to 0.12 petajoule equivalent (PJe). This growth was primarily driven by operational improvements at the Odin-1 gas field following successful scale management interventions.

However, the quarter was not without its challenges. The newly commissioned Odin-2 well, which began production in October 2024, has underperformed significantly relative to expectations. Production rates declined sharply from an initial 3.0 million standard cubic feet per day (MMscf/d) to approximately 0.5 MMscf/d by early January 2025. Initial analysis suggests near-wellbore permeability issues, potentially linked to scale accumulation similar to that experienced at Odin-1, are constraining output. Vintage is designing a low-cost investigation and optimisation program to address these issues.

Operational Insights and Scale Management

Odin-1’s performance improved markedly after scale removal procedures increased flow rates from 1.4 MMscf/d to an average of 3.3 MMscf/d over 48 hours. The company also identified scale accumulation in surface piping and metering equipment, which likely caused under-reporting of production volumes during the quarter. Cleaning and recalibration efforts have been ongoing, with chemical injection equipment installed in December to mitigate future scale buildup, expected to commence operation in February 2025.

The Vali gas field, another key asset, maintained steady production with Vali-1 as the sole producing well, while Vali-2 and Vali-3 remain shut-in due to fluid production issues. Overall, Vintage’s Southern Flank gas project, encompassing Odin and Vali fields, continues to be the cornerstone of its production portfolio.

Strategic and Financial Developments

On the corporate front, Vintage Energy and Galilee Energy mutually agreed to terminate their previously announced merger proposal. The decision followed extensive discussions and a recognition that the original scheme was no longer in the best interests of shareholders, with no revised terms agreed upon.

In response to financial pressures and to improve operational efficiency, Vintage has initiated a significant restructuring plan. Announced in December 2024, this plan aims to reduce staff headcount and direct salary costs by 41%, translating to annual savings of approximately $1.14 million. While redundancy costs will temper savings in the short term, the full financial benefit is expected to materialise in the second half of 2025.

Despite a decline in closing cash to $2.2 million from $4.0 million at the start of the quarter, the company improved its net cash outflow from operating activities by $0.63 million compared to the prior quarter, helped by higher gas sales and reduced corporate expenses. Borrowings net of cash increased to $7.81 million, reflecting ongoing capital management challenges.

Looking Ahead

Vintage Energy’s outlook hinges on resolving the production issues at Odin-2 and successfully implementing scale management across its Southern Flank assets. The company expresses confidence in funding its operations through a combination of operating cash flow, debt facilities, and potential asset sales if necessary. The restructuring is expected to enhance cost discipline and support sustainable operations.

While the termination of the merger with Galilee Energy removes a potential growth avenue, Vintage’s focus remains on optimising existing assets and exploring commercialisation opportunities for its broader portfolio, including the Nangwarry CO2 resource and Galilee Basin projects.