Horizon Oil advises that the Mereenie joint venture gas sales Expression of Interest (“EOI”) process has successfully concluded after targeting bids from across the Northern Territory and the East Coast where gas shortfalls are forecast over the next few years. 

The EOI process has resulted in the Mereenie joint venture entering into a long-term strategic gas sales agreement (GSA) with the Northern Territory Government (NTG). The new GSA covers the firm supply of gas for the six-year period from 1 January 2025 through until 31 December 2030 to underpin the domestic supply of gas to the Northern Territory. Together with an amended existing gas supply agreement with Arafura Rare Earths Limited (ARU), the Mereenie joint venture has now substantially contracted the forecast Mereenie Proved Developed Producing (PDP) gas production until the end of 2030 at current market prices, subject to the ARU GSA becoming unconditional. The gas sales agreements reduce the market dependency on the Northern Gas Pipeline (NGP) with the NTG GSA also including contingent offtake arrangements for firm gas nominations in 2025 if the NGP is offline. The NTG GSA also supports the drilling of two proposed infill wells at Mereenie with contingent offtake arrangements for firm gas nominations following successful drilling.

The Mereenie NTG GSA covers the supply of up to 8.3 PJs of gas (net to HZN)) on a firm basis with take or pay provisions for the six years from 1 January 2025 through 31 December 2030 with the specifics set out below:

• Supply of firm base gas supply of up to 3.6 PJ (net to HZN); 
• The Mereenie NTG GSA mitigates Horizon’s risk to NGP closures by increasing Horizon’s firm sales to the NTG by up to 16 TJ/d (100% JV) on any day in 2025 that the NGP is unable to deliver gas to Horizon’s existing East Coast customers. Contingent supply of up to 1.5PJ (net to HZN);
• The Mereenie NTG GSA underwrites new production by increasing Horizon’s firm sales to the NTG by up to 6 TJ/d (100% JV) once the Mereenie joint venture completes two new proposed Mereenie development wells (subject to successful drilling results). Contingent supply of up to 3.3 PJ (net to HZN).

In addition to the NTG GSA, the Mereenie JV have restructured the existing GSA with ARU to now supply up to 4.1 PJs (Horizon’s share) for the three years from 1 January 2028 through to 31 December 2030 to better align the gas supply with the expected Nolans Project rare earth mine start-up profile. The ARU GSA remains conditional upon the ARU Board making a final investment decision to proceed with the development of the Nolans Project by 31 December 2024.