Central Petroleum Boosts Production and Revenue with Mereenie Well Success

Operational Highlights and Production Growth

Central Petroleum Limited (ASX: CTP) has delivered a robust operational performance for the quarter ended December 31, 2024, underpinned by the successful commissioning of a new gas development well at the Mereenie field. The first of two new wells, WM29, commenced production in January 2025 at approximately 6 terajoules per day (TJ/d), surpassing initial expectations and increasing the field's sales gas capacity to around 30 TJ/d. This milestone marks a significant uplift from the previous capacity of 25 TJ/d and reflects the company's strategic focus on maximising output through advanced drilling techniques.

Sales volumes for the quarter rose 3% to 1.17 petajoules equivalent (PJe), supported by seasonally higher demand in the Northern Territory. On a half-year basis, volumes climbed 10% to 2.3 PJ compared to the prior six months, which had been adversely affected by pipeline closures. The company’s gas fields operated at full capacity for much of the quarter, with only brief interruptions during pipeline connection works for the new wells.

Financial Performance and Revenue Growth

Reflecting the production gains and a modest increase in gas prices, Central Petroleum's sales revenue for the quarter reached $9.4 million, up 4.6% from the previous quarter. The average realised gas price rose slightly to $8.01 per gigajoule equivalent (GJe), maintaining a steady trajectory supported by new, higher-priced contracts. Half-year sales revenue increased 10% to $18.3 million, driven primarily by volume growth and improved contract pricing.

Operating cash flow before capital expenditure, debt servicing, and exploration costs was positive at $3.1 million, underscoring the company’s operational efficiency. Capital expenditure during the quarter was $1.5 million, mainly directed towards the Mereenie drilling program, while exploration spending stood at $1.0 million, largely related to historical cash calls for non-operated permits.

Balance Sheet and Loan Facility Restructuring

Central Petroleum’s cash balance at quarter-end was $23.4 million, slightly down from $24.8 million at the end of September 2024, partly due to $2.5 million being placed in a secured term deposit as collateral for the company’s restructured loan facility. Net cash was reported at $1.6 million, with underlying debt standing at $24.3 million after capitalising interest and refinancing costs.

The company successfully extended and restructured its $22.3 million loan facility with Macquarie Bank, now maturing in December 2029. The revised terms provide significant financial flexibility, including the deferral of principal and interest repayments until March 2027. This arrangement supports Central’s plans to invest in further production growth initiatives at Mereenie and Palm Valley, subject to joint venture approvals, while mitigating refinancing risk.

Strategic Outlook and Market Position

Central Petroleum continues to supply approximately half of the Northern Territory’s gas demand, a position strengthened by the closure of the Northern Gas Pipeline earlier in 2024. The company has secured firm gas supply agreements covering nearly all of its expected 2025 production within the NT, including new contracts with the Northern Territory Government and other customers. These contracts are expected to reflect current market pricing and benefit from minimal transportation costs.

Following the drilling success at WM29, Central is prioritising near-term reserve growth and production increases from both Mereenie and Palm Valley, with plans to appraise the Stairway sandstone formation that could materially enhance resource potential. Meanwhile, activity on the Mereenie Helium Recovery Unit project remains suspended pending market conditions and further appraisal results.