Pipeline Constraints Pressure Central Petroleum’s Sales and Cash Flow

Quarterly Sales and Revenue Impacted by Pipeline Restrictions

Central Petroleum Limited’s latest quarterly report reveals a 4.5% decline in sales volumes to 1.1 petajoules equivalent, primarily driven by seasonal demand fluctuations, an extended closure of the Northern Gas Pipeline, and oil offtake constraints at the Mereenie field. These factors combined to restrict the company’s ability to supply eastern markets, although alternative contracts within the Northern Territory helped mitigate some of the impact.

Consequently, sales revenue for the quarter dropped 6.6% quarter-on-quarter to $11.2 million. While the average unit price of gas delivered was $10.15 per gigajoule equivalent; 28% higher than the same quarter last year; softer prices and a different product mix due to pipeline closures tempered overall revenue gains.

Reserves Upgrade Signals Strong Production Outlook

Despite operational challenges, Central Petroleum reported encouraging reserves upgrades. The Mereenie oil and gas field saw a 9% increase in 2P (proved and probable) reserves, effectively replacing 178% of the field’s FY2025 production. Similarly, the Dingo gas field’s 1P (proved) reserves rose by 6%, replacing 142% of its FY2025 output. These upgrades reflect successful well performance and reservoir modelling, underscoring the company’s ability to sustain production levels moving forward.

New Long-Term Gas Supply Agreement Enhances Cash Flow Certainty

In a strategic move to secure future revenue streams, Central Petroleum signed a new 31-year firm gas supply agreement with McArthur River Mining, commencing December 2025. The contract includes take-or-pay provisions and fixed pricing, providing the company with increased cash flow certainty and a stable customer base. This agreement complements the company’s existing contracted wells, which are fully committed through to the end of 2027.

Financial Position and Share Buy-Back Program

Central’s cash balance at the end of the quarter stood at $26.7 million, slightly down from $27.5 million at June’s end. Operating cash inflows were modest at $0.6 million before interest and exploration costs, reflecting the revenue pressures faced during the period. Capital expenditure was contained at $1.0 million, with exploration spending focused on seismic acquisition preparations and rehabilitation works.

The company also launched its inaugural on-market share buy-back program, authorized to repurchase up to 10% of issued capital over 12 months. However, no shares had been bought back at the time of reporting due to ASX trading constraints. This initiative signals management’s confidence in the company’s valuation and commitment to returning value to shareholders.

Exploration and Operational Outlook

Exploration activities continue with permit renewals and seismic acquisition planning underway, particularly in the Amadeus Basin. Central is actively pursuing new exploration programs targeting helium and naturally occurring hydrogen, reflecting a strategic diversification of its resource portfolio. Importantly, the company reported no safety or environmental incidents during the quarter, maintaining a stable operational environment.