Mereenie Wells Boost Gas Output by 9 TJ/day, Lifting Central Petroleum’s Quarterly Revenue to $11.4M

Production Gains at Mereenie

Central Petroleum Limited (ASX:CTP) has reported a strong operational quarter ending 31 March 2025, highlighted by the successful drilling and commissioning of two new gas production wells at the Mereenie field in the Northern Territory. These wells, WM29 and WM30, came online ahead of schedule and under budget, collectively adding approximately 9 terajoules per day (TJ/d) of production capacity. This represents a significant uplift, with gross gas sales from Mereenie increasing by 9% compared to the previous quarter and production rates peaking at 32 TJ/d during the period.

Despite scheduled maintenance at both Mereenie and Palm Valley fields, and a natural decline at Palm Valley, overall sales volumes remained steady at 1.17 petajoules equivalent (PJe). The increased gas output from the new wells was offset by lower oil liftings and reduced demand from the Dingo gas field, which supplies the Owen Springs Power Station in Alice Springs.

Revenue and Cash Flow Improvements

Central’s financial performance benefited from a 22% increase in average realised gas prices, rising to $9.78 per gigajoule equivalent (GJe) for the quarter. This price uplift was driven by new higher-priced gas contracts that commenced in January 2025, reflecting tightening supply conditions in the Northern Territory market. Consequently, sales revenue rose by 22% to $11.4 million, mirroring the price gains.

Operating cash inflows improved markedly, reaching $3.7 million after exploration and interest expenses, a 45% increase over the previous quarter. This was supported by cash receipts of $11.5 million from customers, capital expenditure of $5.4 million mainly on the Mereenie drilling program, and disciplined cost management. The company’s cash balance stood at a healthy $21.5 million, down slightly from $23.4 million at year-end due to investment in the new wells. Net debt remained minimal at $0.1 million, underscoring Central’s strong balance sheet position.

Contractual and Market Developments

On the commercial front, Central’s conditional gas sale agreement with Arafura Resources for supply to the Nolans rare earths project lapsed after the project failed to reach a final investment decision by the 31 March deadline. Central and its Mereenie Joint Venture partners have resolved to market this volume of firm gas production, scheduled to commence in 2028, to other customers across the Northern Territory and the east coast. This pivot opens new opportunities but also introduces uncertainty regarding future contract terms and counterparties.

Exploration efforts continue with a focus on helium, naturally occurring hydrogen, and hydrocarbons in the Amadeus Basin permits operated by Santos. Meanwhile, rehabilitation and remediation activities are underway in the Southern Georgina Basin as part of pre-relinquishment obligations.

Operational and Safety Highlights

Central reported no safety or environmental incidents during the quarter, with its Total Recordable Injury Frequency Rate (TRIFR) improving slightly to 4.1. The company is advancing permitting for two new appraisal wells at Palm Valley, aiming to enhance production capacity subject to market conditions and joint venture approvals.

Looking ahead, Central’s ability to capitalise on higher gas prices and expanded production capacity will be critical, especially as it seeks to replace the lost Arafura contract volumes. The company’s prudent financial management and operational execution position it well to navigate these challenges.