Vintage Energy Launches $2.1M Offer to Double Gas Production via Scale Remediation

Capital Raising to Fund Production Uplift

Vintage Energy Ltd (ASX: VEN) has announced a pro-rata non-renounceable entitlement offer to raise approximately $2.1 million by issuing around 417.3 million new shares at an offer price of $0.005 per share. Eligible shareholders will also receive one free attaching option for every new share issued, exercisable at $0.009 and expiring in March 2027.

The capital raising is designed to finance a targeted production uplift program at Vintage's Southern Flank gas fields, specifically the Odin and Vali fields. The program focuses on addressing scale accumulation, a mineral deposit issue that has been identified as a significant inhibitor of gas production and metering accuracy.

Addressing Scale Accumulation: A Key Operational Challenge

Scale accumulation, akin to the mineral deposits seen in household appliances, has been found to restrict gas flow and distort metering in Vintage's wells. Initial remediation efforts at the Odin-1 well have already yielded a doubling of gas production, from 1.4 MMscf/d to 3.0 MMscf/d, demonstrating the potential upside of the program.

Vintage now believes scale issues are more widespread across its fields than initially anticipated, affecting multiple wells and metering systems. The production uplift program will implement long-term scale remediation solutions, including flow testing, chemical treatments, and equipment cleaning, to unlock additional production capacity.

Expanding Production at Vali Field

Alongside scale management, the program aims to bring on production from the Toolachee formation at the Vali field, which has not yet been fully exploited. This includes opening isolated zones in Vali-1 and Vali-2 wells and attempting to initiate sustained gas flow at Vali-3, currently shut-in due to water loading.

The company anticipates completing the program within four months, with the expectation that increased production will translate into stronger cash flow and a more robust financial position.

Offer Details and Shareholder Impact

The entitlement offer is open to shareholders registered as of 7:00 pm AEDT on 5 February 2025, with a 1-for-4 subscription ratio. The offer is non-renounceable, meaning shareholders who do not participate will see their ownership diluted. The new shares will rank equally with existing shares, and the options issued will not be quoted on ASX and are non-transferable.

Vintage Energy has also introduced a top-up facility allowing shareholders who fully subscribe to their entitlement to apply for additional shares subject to availability and allocation discretion.

Financial Position and Outlook

Pro forma balance sheet adjustments post-offer indicate an increase in cash reserves to approximately $4.1 million, providing working capital to support the production uplift initiatives and ongoing operations. The company holds over 60 PJ of uncontracted 2P gas reserves, positioning it to benefit from anticipated supply shortfalls in eastern Australia from 2026 onwards.

Chairman Reg Nelson emphasised the strategic importance of the program, noting that the cost of remediation is expected to be recouped multiple times through enhanced production and cash flow, enabling Vintage to pursue further value-adding opportunities.

Risks and Considerations

Investors should be mindful of the inherent risks associated with exploration, development, operational challenges, commodity price volatility, and funding availability. The success of the production uplift program depends on operational execution, contractor availability, joint venture approvals, and market conditions.

The entitlement offer is not underwritten, and there is no guarantee that all options will be exercised, which could affect future capital inflows.