Horizon Oil and its joint venture partners have signed a binding Letter of Intent with Northern Territory’s Power and Water Corporation to fast-track drilling of two new wells at Mereenie, aiming to secure long-term gas supply agreements through 2034.
- Binding Letter of Intent signed for accelerated drilling at Mereenie
- Two new wells targeted for mid-2026 drilling commencement
- Long-term gas supply agreements planned through to 2034
- Early works underway with cost reimbursement provisions
- Partnership includes multiple joint venture participants
Accelerated Drilling Program Takes Shape
Horizon Oil Limited (ASX – HZN) and its Mereenie Joint Venture partners have taken a decisive step to boost gas production in the Northern Territory by entering into a binding Letter of Intent (LOI) with the region’s Power and Water Corporation (PWC). This agreement sets in motion early works for an accelerated drilling program targeting two new wells at the established Mereenie gas field, with drilling expected to commence by mid-2026.
The early works phase includes ordering critical long-lead equipment, progressing civil infrastructure, and selecting a drilling rig, all designed to ensure a swift transition to active drilling. This proactive approach reflects the partners’ commitment to meeting the Northern Territory’s growing gas demand and enhancing supply security.
Long-Term Gas Supply Agreements on the Horizon
Alongside the drilling plans, the LOI outlines the framework for long-term, firm gas supply agreements extending through to 2034. These agreements aim to commercialize uncontracted firm gas production from Mereenie, including volumes expected from the new wells. While the current term sheets are non-binding and contingent on final approvals from all joint venture participants and PWC, the intention is to formalize binding Gas Sale Agreements by February 20, 2026.
Importantly, the LOI includes provisions allowing the joint venture partners to be reimbursed for early works costs should the binding agreements not materialize by the deadline. This mitigates financial risk while maintaining momentum on the project.
Strategic Importance for the Northern Territory
The Mereenie gas field, located in the Amadeus Basin, has long been a cornerstone of the Northern Territory’s energy supply. Horizon Oil holds a 25% interest in the field, alongside partners including Central Petroleum Limited, Echelon Mereenie Pty Limited, Horizon Australia Energy Pty Ltd, and Cue Mereenie Pty Ltd.
By accelerating drilling and securing long-term supply contracts, the joint venture aims to deliver significant new gas volumes quickly, leveraging existing production capacity. This strategy not only supports regional energy needs but also reinforces the stability and reliability of gas supply for customers across the Northern Territory.
Leadership Perspective
Horizon Oil’s CEO, Richard Beament, highlighted the significance of the LOI – "This Letter of Intent with PWC marks a major step in unlocking additional, reliable gas supply for the Northern Territory and increasing gas supply from the Amadeus Basin. By commencing early works now and targeting drilling in mid-2026, we can bring new Mereenie volumes to market quickly, using existing field capacity. Formalising long-term GSAs consistent with the in-principle term sheets will underpin supply through to 2034, supporting the NT’s gas demand from the middle of next year."
As the project advances, the collaboration between Horizon Oil, its joint venture partners, and PWC will be critical in delivering secure and sustainable energy solutions for the region.
Bottom Line?
The Mereenie project’s accelerated timeline and long-term supply focus position Horizon Oil at the forefront of Northern Territory’s energy future, pending contract finalization early next year.
Questions in the middle?
- Will binding Gas Sale Agreements be finalized by the February 2026 deadline?
- What are the expected production volumes and financial impacts from the two new wells?
- How might this development influence gas prices and supply security in the Northern Territory?