CENTRAL Petroleum has been racing to reach a final investment decision for its Range project in the Queensland Surat Basin, but with the market suddenly sidelined by the outbreak of COVID-19 and the global and domestic economy struggling to stay afloat, has had to shelve its project for the time being.
Business growth has been the company's priority for the last year and has seen it accumulate a portfolio or operating assets and exploration tenements.
However, the company told the share market today while there was no direct material impact to its current production from a low oil price and volatile market, it expected logistical challenges to hinder its growth projects.
Central and its 50% joint venture partner, fertiliser manufacturer Incitec Pivot, had been targeting an FID for the Range coal seam gas project in Queensland for early 2021. Incitec had been progressing Range as a way to shore up much-needed domestic supply.
Pre-FID activities and planning for a three-well appraisal pilot project were well under way. But now, due to a crashing market the venture has abruptly stopped work. Neither partner has a time frame for when work may recommence.
Incitec told shareholders it "remained committed" to the domestic gas project, which has a 2C contingent gas resource of about 130 petajoules, and hoped to restart activities "as soon as possible."
Central insisted it too was committed to the project and would accelerate operations "as soon as business conditions permit."
The company had a cash balance at the end of February of $27.2 million and has no major exposure to the low oil price as about 90% of its production is gas, not oil.
It also recently extended its debt facilities to September 2021 and only has a $5 million repayment due in the next 12 months, positioning the company in a relatively stable position.
Other exploration and development projects, including Central's Northern Territory Amadeus Basin project has been put aside as they are "no longer feasible given the logistical constraints" imposed by travel and infrastructure restrictions imposed by the Territory government to isolate vulnerable remote communities from the virus.
The company said it would revise its exploration schedule after market conditions stabilised. Again, there is no time frame on when this could occur.
Source: Energy News Bulletin
Read more here