Central Petroleum has secured a letter of intent for a long-term gas supply contract through 2034 and expanded its exploration portfolio into the Otway and Cooper Basins, setting the stage for multiple new wells and production growth.
- Letter of intent for up to 25.5 PJ gas supply through 2034
- New 1.3 PJ gas sales agreement with McArthur River Mining
- Strategic acquisitions in Otway and Cooper Basins with planned drilling
- Conditional sale of sub-salt permits for helium and hydrocarbon exploration
- Initiation of on-market share buy-back program
Long-Term Gas Supply Agreement in the Northern Territory
Central Petroleum has taken a significant step in securing its future revenue streams by entering into a binding letter of intent with the Northern Territory’s Power & Water Corporation. This agreement, subject to final approvals, outlines the supply of up to 25.5 petajoules of gas through to the end of 2034. The deal underwrites the drilling of four new wells at the Mereenie and Palm Valley fields, with drilling expected to commence mid-2026. This government-backed contract not only promises stable cash flows but also enhances gas supply security in the region.
Expanding Exploration Horizons in Victoria and South Australia
In a strategic move to diversify and grow its resource base, Central has acquired interests in exploration permits in the onshore Otway Basin of Victoria and multiple retention leases in the Cooper Basin, South Australia. The Otway Basin permit includes the highly prospective Enterprise North gas target, with drilling scheduled for the second half of 2026. Meanwhile, the Cooper Basin assets, covering 24 retention leases and one exploration permit, are set for two to three exploration wells targeting oil and gas in early 2027. These acquisitions position Central to tap into the buoyant east coast gas market with relatively low-cost, near-term drilling opportunities.
Sub-Salt Exploration and Helium Prospects
Central has also entered a conditional agreement to sell two sub-salt exploration permits in the Northern Territory to UK-listed Georgina Energy Plc in exchange for a 25% equity stake. This transaction, contingent on Georgina raising at least £7 million, aims to restart sub-salt drilling activity targeting helium and hydrocarbons, with a key well planned for mid-2027. This move allows Central to retain upside exposure to helium exploration while transferring operational risk to a specialist explorer.
Production and Financial Performance
Production volumes for the December quarter were slightly down by 2% compared to the previous quarter, primarily due to oil offtake constraints at the Mereenie field. Gas sales prices averaged $9.59 per gigajoule, a 30% increase year-on-year but slightly lower than the previous quarter. Sales revenue for the quarter was $10.4 million, a 7% decrease from the prior quarter, reflecting the impact of oil sales constraints. Despite this, Central’s cash balance improved to $29.4 million, supported by positive operating cash flows and prudent capital management.
Shareholder Returns and Outlook
In a first for the company, Central Petroleum initiated an on-market share buy-back program, acquiring over 2 million shares to date, representing 0.3% of issued capital. This move signals confidence in the company’s outlook and commitment to returning value to shareholders. With up to eight new wells planned across three basins over the next 18 months, including both development and exploration targets, Central is positioning itself for a potential production uplift and resource growth in a tightening gas market.
Bottom Line?
Central Petroleum’s strategic contracts and exploration expansions set the stage for growth, but final approvals and drilling results will be key to unlocking value.
Questions in the middle?
- Will the long-term gas supply agreements be formalised by the February 2026 deadline?
- What are the prospects and risks associated with the upcoming exploration wells in the Otway and Cooper Basins?
- How will Central manage oil offtake constraints and improve oil revenue streams moving forward?