Central Petroleum Accelerates Drilling and Secures Long-Term Gas Supply Deal
Central Petroleum has signed a binding Letter of Intent with Northern Territory's Power and Water Corporation to fast-track drilling of four wells and establish long-term gas supply agreements through 2034.
- Binding LOI with Power and Water Corporation for accelerated drilling
- Four-well drilling program at Mereenie and Palm Valley fields
- Long-term gas supply agreements targeting 25.5 PJ through 2034
- Early works underway with drilling to commence mid-2026
- Gas Sale Agreements expected to be formalised by February 2026
Central Petroleum and Power and Water Corporation Partnership
Central Petroleum Limited (ASX – CTP) has taken a significant step to bolster gas supply in the Northern Territory by entering a binding Letter of Intent (LOI) with the Northern Territory’s Power and Water Corporation (PWC). This agreement sets the stage for an accelerated drilling program targeting four wells across the Mereenie and Palm Valley gas fields, two of the region’s key conventional gas assets.
The LOI outlines a collaborative approach to rapidly increase gas production capacity, supporting the Territory’s energy security and meeting growing demand. The partnership also includes conditional long-term gas supply arrangements, with uncontracted gas volumes of up to 25.5 petajoules (PJ) committed through to the end of 2034.
Accelerated Drilling Program and Early Works
Early works for the drilling program have already commenced, focusing on long-lead items such as rig selection and civil preparations. The drilling itself is targeted to begin by mid-2026, with two wells planned at Mereenie and two at Palm Valley. This accelerated timeline reflects Central Petroleum’s intent to quickly bring additional gas volumes online to meet market needs.
Central Petroleum holds a 25% interest in the Mereenie field and a 50% interest in Palm Valley through joint ventures with partners including Horizon Pty, Echelon Energy Ltd, and Cue Australia. The company’s existing infrastructure and operational experience in the Amadeus Basin provide a strong foundation for this expansion.
Long-Term Gas Supply and Market Impact
The LOI includes conditional gas supply sheets that will transition into formal Gas Sale Agreements (GSAs) by February 2026, subject to internal approvals. These agreements are designed to provide firm production volumes to PWC, underpinning reliable and affordable gas supply for residential and industrial customers across the Northern Territory.
Central Petroleum’s CEO, Leon Devaney, highlighted the significance of this development, noting that it represents a substantial commitment to increasing gas supply security in the region. The initiative aligns with government priorities to ensure steady energy delivery and supports the Territory’s broader economic growth.
Strategic Outlook and Risks
While the drilling program and gas supply arrangements promise to enhance Central Petroleum’s production profile and revenue streams, the company remains cautious. The GSAs are conditional on approvals and successful execution of the drilling program. Moreover, the project does not underwrite drilling risks, meaning operational and regulatory challenges could affect timelines and outcomes.
Nonetheless, the move signals confidence in the Amadeus Basin’s conventional gas reserves and Central Petroleum’s ability to deliver on its growth strategy. The accelerated drilling and long-term contracts could position the company as a key energy supplier in the Northern Territory for the coming decade.
Bottom Line?
Central Petroleum’s accelerated drilling and long-term supply deal mark a pivotal step in securing Northern Territory’s gas future, with execution now the critical focus.
Questions in the middle?
- Will the formal Gas Sale Agreements be executed on schedule by February 2026?
- How will operational risks impact the timing and success of the four-well drilling program?
- What are the potential market reactions to increased gas supply from Central Petroleum in the Northern Territory?
