The first two Steps of the Company’s Strategy to realise its Vision and to deliver attractive, sustainable returns for Shareholders involve development of the Company’s exploration portfolio.
The envisaged pathway to delivery of this Strategy involves immediate focus on the Wellesley and Wombat gas projects. This is because:
- Those projects are considered to have high probabilities of success. In the case of Wombat, gas is known, and independently certified, to exist and design of the Wombat-5 lateral well has been undertaken using factual information (reservoir characteristics, etc) gathered by the Company over years of exploration activity. In the case of Wellesley, gas has been identified during historic drilling activity.
- Both gas fields will be easily commercialised. Gas from the fields is of good quality, requiring only minimal processing, can be delivered to market through pipeline infrastructure in proximity of the project and, being onshore, is materially cheaper to produce than gas from offshore or from unconventional sources.
- The Australian east coast gas market is experiencing tight supply and high prices.
It is anticipated the Wellesley project will be drilled in January 2022, with potential for it to quickly developed to generate income to fund activities at Wombat. While the Company will also endeavour to drill the Otway-1 gas well in a similar timeframe to development of the Wellesley and Wombat gas fields, the next major focus is anticipated to involve leveraging of returns from the Wombat project to allow pursuit of other projects, in particular the world-scale Portland Energy Project. This concept is illustrated below.
- Step 1 sees revenue from Wellesley project utilised to fund resumption of Victorian exploration
- Step 2 sees revenue from Wombat gas sales utilised to fund both world-scale opportunities and pursuit of sustainable energy initiatives.
Based upon the Company’s Victorian assets alone, successful implementation of the initiatives set out above could see the Company supplying over 200 TJ/d of gas into the east coast Australian market by 2030. For the mathematically inclined at a margin of $2.75/GJ, 200 TJ/d gas production generates $220m pa of revenue.