NEW GAS SALES AGREEMENT AND FINANCE FACILITY EXTENSION
Central Petroleum Limited (ASX:CTP) (“Company” or “Central”) has signed agreements for
the sale of 3.5 PJ of gas and a 12-month extension to its existing finance facility with Macquarie
Bank Limited (“Macquarie”).
• Central to supply 3.5 Petajoules (PJ) of gas to Macquarie (or its nominee) over calendar
years 2022 and 2023.
• The gas supply agreement is to be pre-paid in full in December 2020.
• Funding from the gas supply agreement will be used for the recompletion of four existing
wells and drilling two new crestal production wells at the Mereenie Field in 2021.
• The programme is expected to return the Mereenie Field’s gross JV gas production
capacity to over 45 Terajoules per day (TJ/d) when completed next year, delivering a
target total volume in the order of 40 PJ (20PJ net to Central).
• The term of Central’s existing $69.8 million finance facility with Macquarie has been
extended by 12 months, with the new maturity date now 30 September 2022.
These transactions will accomplish a series of important corporate objectives for Central,
i. Funds critical Mereenie field activity to increase production capacity back to above a
target plateau of 45 TJ/d (gross JV);
ii. Significantly increases target production capacity (net of the new gas supply
agreement) for marketing into a domestic gas market recovery from 2022;
iii. Reduces gas contracting uncertainty by removing an existing Macquarie option to
purchase gas in 2022 and 2023.
iv. Demonstrates strength in the domestic gas market from 2022;
v. Preserves firm contracting capacity for delivery through the proposed Amadeus to
Moomba Gas Pipeline (“AMGP”) from 2024;
vi. Mitigates refinancing risk and increases capital structure certainty through to late
vii. Creates cash flow flexibility through 2021 under a restructured debt repayment
ASX ANNOUNCEMENT AND MEDIA RELEASE – CENTRAL PETROLEUM LIMITED Page 2
New Gas Sale Agreement
Under the gas sale agreement, Central will, subject to certain conditions precedent having
been met, be paid in advance for the gas as a lump sum on 15 December 2020 and supply
3.5 PJ of gas to Macquarie (or its nominee) over calendar years 2022 and 2023. The gas sale
agreement removes Macquarie’s existing option to purchase additional gas in 2022 and 2023
under the Gas Sales and Prepayment Agreement announced in May 2016 in which 5.2 PJ of
gas was sold for delivery over CY2019, 2020 and 2021. The new gas sale agreement will
essentially continue gas deliveries to Macquarie (or its nominee) at the same rate for a further
2 years (CY2022 and 2023).
The new gas sale agreement increases Central’s firm contracted gas sales to 7.5 PJ in
CY2022 and 5.2 PJ in CY2023 (refer figure 1 below), demonstrating strength in the term gas
market from 2022 whilst preserving Central’s firm contracting capacity for deliveries through
the proposed AMGP from 2024.
The funds for the gas that are paid in advance will be used by Central to fund its share of costs
associated with recompleting four existing wells to produce gas currently behind pipe and
drilling two new crestal production wells at the Mereenie Field in 2021.
The programme, which is subject to final JV approval, is expected to return the Mereenie
Field’s gross JV gas production capacity to over 45 TJ/d when completed next year, delivering
a total incremental volume in the order of 40 PJ (20 PJ net to Central). The increased
production capacity resulting from this investment will increase the quantity of firm gas
available for marketing from 2022, including into markets potentially accessible via the
proposed AMGP from 2024.
ASX ANNOUNCEMENT AND MEDIA RELEASE – CENTRAL PETROLEUM LIMITED Page 3
Loan Facility Extension
Central and Macquarie have agreed to extend the term of Central’s $69.8 million finance
facility for a further 12 months. Subject to certain conditions precedent having been met, the
facility will mature on 30 September 2022. There is no change to facility pricing and the finance
facility will have a restructured repayment profile which continues repayments at $1M/quarter
for the next four quarters, increasing to $2M/quarter on and from 31 December 2021 through
to the end of the facility term in September 2022. The restructured debt service profile will
provide additional cash flow flexibility for Central as it pursues its various growth strategies.
“The transactions announced today pave the way for our strong financial performance as we
emerge from the current market downturn. Using a pre-sale structure to fund field drilling that
unlocks significantly more gas production capacity from 2022 accomplishes several key
corporate objectives. Combined with the extension of our cost-efficient finance facility to late
2022, these transactions give Central flexibility and a solid financial base as we move forward
in progressing our growth activities.”
courtesy of Bell Direct
i do not hold this share
What price is prepayment at ? Current long term price net to CTP is about AU$5.50. Prepayment suggests some benefit to Macquarie which is probably discount to market ? At yearly supply rate 1.73 PJ at market AU$5.50 net to CTP is AU$ 9,515,000 a year. Up front payment is AU$19,030,000. Useful cash for CTP but doesn't justify todays 13.6 % rise in share price.
26 October 2020
RESIGNATION OF DIRECTOR
Central Petroleum Limited (ASX:CTP) (“Company” or “Central”) wishes to congratulate one
of its Non-Executive Directors, Dr Julian Fowles, in being appointed Chief Executive Officer
and Managing Director of Karoon Energy Limited. Dr Fowles advises that it is a requirement
of his appointment that he resigns all of his non-executive directorships, including with Central,
in order to focus on his new role. The effective date of his resignation is 31 October 2020.
Central’s Chair, Mr Wrix Gasteen, said “Dr Fowles has been a valuable and effective Board
member and brought particular expertise and experience in exploration and development to
Central. In addition, his appointment in June 2019 was a strong endorsement of the
Company's strategy and growth potential, and came at a time of significant change for
“On behalf of all Central Board members, I wish Julian all the best in his new role and thank
him for his contribution to Central.”
-endsThis ASX announcement was approved and authorised for release by Wrixon Gasteen, Chair of Central
where was the congratulatory announcement when Cottee left ?
Chairman Cottee, always causing problems, .... no matter where he turns up;
Mongolia replacing Australia as coal provider
Last month China told some of its state-owned steelmakers and coal-fired power plants to stop importing Australian coal with immediate effect.
Among the utilities given instructions to look elsewhere for thermal coal were Huaneng Power International, Datang International Power Generation and Zhejiang Electric Power.
It has been reported by the South China Morning Post this week that Chinese steel mills and power stations have started buying more coal from Mongolia after Beijing imposed a ban on imports from Australia.
Coal from Mongolia, which borders China to the north, is the most obvious replacement for Australian coal, the paper reported.
It is also being reported that some Australian winemakers have now suspended shipments to China fearing that they will not be allowed entry.
but isn't the CTP board the doyen of transparency
that is what ASIC and ASX profess to enforce
Range is the priority for both CTP and Incitec right now. With Macquarie pre-payment December CTP can accelerate Range development at every opportunity getting reserves doubled, production on-line, cash coming in, and share price up ( before making a new issue ? ).