Empire Energy: It's happening - Empire signs Govt contract to deliver first gas from biblical scale gas field
Empire Energy Managing Director Alex Underwood on 3AW 2GB 4BC 6PR Bulls N' Bears Report
Listen to ASX-listed Empire Energy Managing Director Alex Underwood talk to Matt Birney on the Bulls N’ Bears Report about Empire’s game changing 10-year “take or pay” deal to sell first gas from the extraordinary Beetaloo basin to an Australian state Government.
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Empire Energy is looking to become the first gas producer out of the mammoth onshore Beetaloo Gas Basin in the Northern Territory that some say contains almost biblical levels of gas. Empire is one of the largest landholders in the basin and recently turbocharged its ambitions after inking a deal to sell first gas to the Northern Territory Government from its Carpentaria pilot project.
RADIO INTERVIEW - TRANSCRIPT
Matt Birney - Welcome to Bulls N' Bears brought to you today by gas developer Empire Energy.
Matt Birney - ASX code: EEG
Matt Birney - I'm Matt Birney and I'm joined now by the Managing Director of Empire Energy, Alex Underwood
Matt Birney - Hi Alex
Alex Underwood - G'day Matt
Matt Birney - Okay Alex so Empire has just signed a deal to sell first gas out of the Northern Territory's Beetaloo Basin to the Northern Territory Government no less.
Matt Birney - Lots to unpack here firstly, tell me, what is Empire's current gas resource in the Beetaloo and just how much gas do people think the broader Beetaloo Basin might hold?
Alex Underwood - This is the biggest undeveloped gas resource in Australia. We've got 47 trillion cubic feet of recoverable gas and the Basin itself contains over 500 trillion cubic feet of gas.
Matt Birney - All right well let's get into this deal with the Northern Territory Government, how much gas a day will you sell to them and what does the deal look like? Is it take or pay or is it just best endeavours?
Alex Underwood - So we've signed a deal to sell 25 terajoules a day, that's nearly half of the Northern Territory's electricity demand. And that's a 10-year contract take or pay terms.
Matt Birney - What's the current price of gas and how have your prices deal?
Alex Underwood - So the price of gas on Australia's east coast right now is around $15 a gigajoule or $15,000 per terajoule. The terms of our agreement are confidential and they're a little bit below that, but it's price we're very happy with.
Matt Birney - How will you get the gas to the Northern Territory government?
Alex Underwood - There's a pipeline running right through our tenement out to the McArthur River zinc mine and the government's already built a pipeline connection for us so we can put gas straight into that pipe.
Matt Birney - Can you sell gas to that zinc mine?
Alex Underwood - So we'll be selling it to the NT government and it will go to that mine and then back out into the NT market.
Matt Birney - How significant is this deal to your Carpenteria project? Will it essentially underwrite its commercial development or just add to it incrementally?
Alex Underwood - This is a huge development for our company, it really takes us from explorer phase into developer phase and with these cash flows now locked in, we can secure additional financing and get the project into production.
Matt Birney - So when do you expect first gas sales from Carpenteria?
Alex Underwood - It's only 12 short months away Matt, in the middle of next year.
Matt Birney - Okay and very quickly, how much cash did you have at last report and what will it cost you to get into production?
Alex Underwood - Had over $51 million cash in our bank account at the end of the last quarter.
Alex Underwood - It'll cost a little bit more than that to move into production but now that we've got the gas sales agreement in place, we see it underwriting some debt finance so that we can move into production.
Matt Birney - Alex Underwood from Empire Energy.
Matt Birney - Thanks for joining me on Bulls N' Bears and remember we're only here to give you information, not advice, which you should of course seek independently.
Matt Birney - I'm Matt Birney and this is Bulls N' Bears.
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