Equus advances gas project with Alcoa contract and new partnering funds

• Binding conditional 10-year Alcoa gas sales agreement for approximately 50 TJ/day
• Contract represents approximately 182 PJ of domestic gas supply
• US$1.5 million released for Stage Two project partnering
• Pre-FEED model estimates US$867 million NPV10 and 31% nominal IRR
• A$11.7 million cash balance and 6.3 quarters of estimated funding

Alcoa Agreement Establishes Domestic Gas Customer

Equus Energy Limited (ASX:EQU) has moved its Equus Gas Project beyond a purely technical proposition, signing a binding conditional 10-year gas sales agreement with Alcoa of Australia for approximately 50 TJ a day. The contract equates to about 182 PJ of domestic gas over its term and is intended to satisfy the project’s domestic supply commitment under Western Australia’s Domestic Gas Reservation Policy.

The agreement makes Alcoa the project’s foundation domestic customer, although it is not the same as a final investment decision. The gas sales deal sits within a broader funding arrangement that provides access to up to US$30 million for Pre-FEED, FEED and progress towards FID, subject to stage conditions and Alcoa’s internal approvals. The filing does not state when project start-up will occur.

The latest milestone follows the company’s , which covered the conditional 10-year supply arrangement and highlighted the project’s funding and permitting hurdles. The current report records the agreement’s execution and the next funding step, rather than production commencing.

US$1.5 Million Released for Project Partnering

Alcoa accepted that the Stage One Pre-FEED conditions had been met in September and approved Stage Two, described as Project Partnering. That decision released a further US$1.5 million to support discussions with potential operating, LNG offtake, infrastructure and financing partners.

Equus’s preferred development concept targets approximately 2 Mtpa of LNG, 50 TJ a day of domestic gas and peak condensate production of roughly 12,000 barrels a day over a modelled 15-year project life. It would use a leased floating production, storage and offloading vessel, a third-party export pipeline and existing processing infrastructure associated with either Woodside’s Pluto facilities or Santos’s Varanus Island infrastructure.

The was based on a 100% project, post-tax and unlevered model. It estimated a Project NPV10 of US$867 million, a nominal IRR of 31% and capital payback approximately two years after first production. Phase One capital expenditure was estimated at about US$1.25 billion in real 2026 dollars, including a 20% contingency but excluding the capital costs of the leased FPSO and third-party export pipeline. The model also used an LNG FOB breakeven price of about US$6.60 per MMBtu against an assumed LNG price of US$9.50 per MMBtu.

Cash Runway and FID Hurdles Remain

Equus held A$11.7 million in cash at 30 September after net operating cash outflows of A$1.865 million during the quarter. Exploration and evaluation spending was A$1.378 million, mainly related to Pre-FEED work. The company reported an estimated 6.3 quarters of funding at the quarter-end expenditure rate, while Alcoa reimbursed about A$865,310 of Stage Two costs after the reporting date.

The project remains backed by 1.7 Tcf of 2C Contingent Resources and 38 million barrels of condensate on a 100% project basis. Those resources are not reserves, and the economic evaluation remains a pre-FEED assessment rather than a committed construction plan. Equus still needs to advance partnering, financing, FEED and approvals before FID, while the renewal application for the WA-70-R permit remains under assessment.

Equus also appointed Grant Davey as non-executive chairman and Michael Barnes as an independent non-executive director during the quarter. Separately, shareholders will be asked to approve 3 million Class D Performance Rights for each of managing director Will Barker and executive director Andrew Leibovitch. The rights would vest on an announced FID or a 90-day VWAP of at least A$0.80, subject to the terms set out in the filing and shareholder approval.

Bottom Line?

The Alcoa contract gives Equus a credible domestic anchor, but the next test is whether Stage Two converts interest from partners into financeable infrastructure and an FID.

Questions in the middle?

• Can Equus secure operating, infrastructure, LNG offtake and financing partners on terms that support the pre-FEED economics?
• How will the project’s US$1.25 billion Phase One capital requirement be funded, particularly with FPSO and export pipeline capital excluded from that estimate?
• When will the WA-70-R renewal, FEED work and other approvals provide enough certainty for a final investment decision?