Central Petroleum Limited (CTP) Earnings Call Transcript & Summary

Good morning. Welcome to our webinar covering the first half results for fiscal year 2023. My name is Leon Devaney. I'm the CEO and Managing Director at Central Petroleum. Today, we're joined by Damian Galvin, our CFO, who will be covering our financial results for the first half year as well as Ross Evans, who is our COO, who will be providing an update on our Range Gas Project and our sub-salt exploration program. At the conclusion of the webinar today, we will be responding to questions, which you can submit by selecting the questions tab at the bottom right-hand side of your screen. It's a few months since our last presentation, so we have a number of things to cover off on today. Let's get started with an overview of highlights and recent activities. The first half of the fiscal year was dominated by a major exploration program targeting deep formations within our producing fields. As you would be well aware, the exploration program didn't turn out as we had hoped. We experienced extremely difficult subsurface drilling conditions and significant cost pressures, both of which contributed to the exploration program, getting no technical result from Palm Valley Deep or Dingo Deep. Fortunately the Palm Valley-12 well was designed to have a fallback production lateral, which has now been drilled and brought online in November. As a production well, PV12 has been a success. Initial production was over 10 TJs per day with a lateral well payback of less than 1 year, both of which were much better than our initial targets. Our first half financial results were solid on the back of strong oil and gas prices. We've also been very focused on managing cash flow in advance of our upcoming sub-salt exploration program. Whilst we get funding for 2 of the 3 wells under a free carry, we still need to fund our share of the Dukas-1. In addition, we need to closely manage cost overruns within the drilling program, which we know from our experience with PV12 is an issue for all operators under the current inflationary environment. The expansion of our existing debt facility will also help us in managing our available capital over the next 12 months. Domestic gas market fundamentals remain strong, although uncertainty on price caps and other market regulations are impacting the term gas market and overall investment throughout the sector. We have continued to test our range gas pilot wells and have seen positive trends in gas rates, which is a welcome development. And finally, we have been busy looking for a farm-out partner to advance exploration drilling at our Mamlambo oil prospect and our Zevon sub-salt prospect. We'll cover these topics in more detail throughout the presentation. But I'd like to start things off with Central's Chair, Mick McCormack, who will say a few words about our strategic review activities.

Thank you, Leon, and good morning to you all, folks. As you know, there's been a lot of activity in Australia's energy markets since I spoke at the AGM in November last year. Whilst the energy market fundamentals continue to look strong, the federal government has introduced a fair price cap for 2023, and we are yet to see the final details of the ongoing inverted commerce fair price regulations. This has added a great deal of uncertainty to our industry. But in the meantime, we've been focusing on maximizing the value of our existing portfolio by bringing more gas to market. Our successful Palm Valley-12 well is an example of this, and we are well advanced to bring on more capacity at Mereenie during the year. Leon and the management team will provide you with more detail shortly, but first, I wanted to say a few words about the strategic review, which has been progressing in the background in parallel with our growth-orientated activities. You may recall that we appointed RBC Capital Markets late last year to conduct a strategic review of Central's asset portfolio and to identify opportunities to crystallize value for shareholders. The initial phase of the review has been completed, and we are now exploring some of these opportunities. Given the variety of our asset portfolio and the dynamic market and regulatory landscape, it will take a bit more time to evaluate and fully consider various alternatives. We want to get this right for our shareholders and we anticipate the strategic review will be concluded around the middle of this year. I thank our shareholders for their patience while we work diligently through this process. And you can be assured that in the meantime, we remain focused on managing costs, safety and progressing our growth initiatives. I'll now hand you back over to Leon and the management team for the balance of the presentation. Thank you, and good day.

Thanks, Mick. Moving on to our half year results. I'll hand the presentation over to our CFO, Damian Galvin.

Thanks, Leon. Look, there's a solid operational results the 6 months to December, and that's off the back of some pretty high gas prices, particularly the first quarter. Volumes were actually down 10% on the previous half year, and they are down about 11% from the corresponding half the year earlier. That's on a like-for-like basis, if you exclude the higher ownership interest that we had in the field in the September quarter of 2021. That decline in volume was largely due to natural field decline, but also the temporary closure of Northern Gas Pipeline trips at September through to mid-December. We were able to redirect gas into the Northern Territory markets with the volumes were lower than they otherwise would have been. The good news is we're expecting a much stronger second half of the year, we got the new Palm Valley well operational and access reopened to the Eastern markets. Despite the lower volumes, we were able to post revenues of $16.7 million, that's lower than the preceding half year with those pipeline constraints and prices receding from record highs. The revenues were 6% higher than the corresponding previous December half year on a like-for-like basis due to those higher realized prices. The impact of the price is best illustrated on the chart, that's on left of the slide. It shows the average portfolio sales price for the last 5 half years. And you can clearly see there's a jump in both halves of calendar year 2022. And this reflects the impact of the energy crisis that we saw on the East Coast in the winter of '22. Now Leon is going to touch on the market prices a little bit later. And notwithstanding some lower spot prices in recent weeks, we do expect average pricing to remain strong overall. You'll note that even with the $12 gas price cap that applies in 2023, there's still upside from our first half portfolio average, which was about $7.50 gigajoule. So we're not too concerned about the 2023 price cut, while the rest of the industry are very interested in the recent price regulations which are going to apply thereafter. Underlying EBITDAX, so that's earnings before interest, tax, depreciation, amortization and exploration costs was $5.3 million for the half year. It was down $5 million from the first half of the previous year due to lower ownership interest and lower volumes. Exploration costs were relatively high this half year at $10.9 million, and that's mainly the cost of the Palm Valley drilling program, which finished up in the half year. So as a result, the statutory net loss for the 6 months was $11.2 million. And as I mentioned earlier, we're certainly expecting a better second half. Now one of the main drivers of a better second half is the performance of the new Palm Valley-12 well, which has already generated over $3 million of revenue for Central since it was commissioned in late November. The chart on the slide there will give you an idea of the impact. You can see that we had the benefit of 1 month of increasing production in December. This is expected to continue throughout the half year with the Palm Valley field expected to continue producing at more than double its previous rates. At this rate, we're on track to recover the capital investment within 12 months. Importantly, the PV12 performance opens up opportunities to drill similar wells at Palm Valley to access additional reserves in the future. In terms of funding, look, we do have a busy 18 months ahead of us now so we embark on some pretty significant growth-orientated programs, and they're all fully funded. At Mereenie, we've got 5 well recompletions and 2 new development wells planned and the flare gas recovery project. And these are all fully funded from the remaining $3.4 million of carry funds from New Zealand Oil & Gas, and an expanded debt facility. You'll recall, we increased that debt facility, our existing loan facility in December by an additional $12 million, which is now available to fund development activities. We drew down $1 million of that in December to activate the facilities, and we can draw down additional funds as we need them. So the loan balance is currently sitting at $30 million, and we've got cash on hand, it takes our net debt to $16.8 million at 31 December. And the other big program underway is the 3-well sub-salt program operated by Santos and funded to $10.6 million from Peak Helium farmout, which is expected to complete very soon. So we will be funding our share of the Dukas costs, which aren't carried, obviously, from our working capital. So overall, well, the first half results could best be described as solid. We are certainly poised for a much stronger second half. And we've got these very attractive growth and exploration projects coming out. So with that, I'll pass back to Leon.

Thanks, Damian. I'll now hand the presentation over to our COO, Ross Evans, to update us on our Range pilot wells and also our planned sub-salt exploration program.

Thanks, Leon, and good morning, everyone. It's great to be presenting an update on the exploration and appraisal activities that we have at Central going on at the moment and coming up in the future. So let's kick off with Range. It's our CSG block in the Walloons basin in venture with Incitec Pivot. And around about a year ago, we had 3 single-well pilots drilled here, Range 6, 9 and 10, and they've been on pump since we brought them online around about a year ago. And we're seeing some really intriguing activity at our pilot since around November 2022. Firstly, we have some water rates step up, which is quite nice. You would expect a normal pilot would have stabilized by now, but we're actually seeing continued increases in water rates, which suggests that the ongoing drawdown is improving the connection with the broader reservoir. So that's really good. And then we've seen gas rates continue to ramp up over that time period and particularly since November 2022, where we've seen gas rates more than double. And we're now up at around about 70 gigajoules a day as the pilot total. And this sort of gradual ramp-up that you see in CSG projects is fairly typical what happens on in CSG plays on the edges of the fairway. And a few examples here from Queensland government data, GLNG Arcadia, CSG play in the Bowen Basin came online at 60 gigajoules a day. And yet after 6 years, the field production, the total field output from that particular project was up to 90 terajoules a day. So a very strong result. And similarly, Senex Roma North came online at 60 gigajoules a day per well. And then after 3 years, field production had grown to 20 terajoules a day. So it's quite typical of the CSG plays on the fairway edges with a slow and steady ramp-up with the CSG wells. So we're certainly looking forward to seeing how the gas rates continue to ramp up over time. And the gas rates are now at a level where we're starting to think about utilization options for that gas, such as using it to drive our on-site power generation or innovative revenue options that we are considering. And so we're working quite closely with Incitec at the moment to determine the forward appraisal plan for Range. So some really nice results that we've seen in the last few months at Range, and we're really looking forward to seeing how that plays out in the future. So let's change gear now and move to the Southern Amadeus. And this really is a world-class play in the Southern Amadeus Basin. What makes it so powerful for this is the salt. Salt is an excellent seal for hydrocarbons, but a particularly good seal for smaller molecules such as helium and hydrogen. And there are very, very thick layers of salt in the Southern Amadeus, and that's what makes it a world-class play for hydrocarbons and also helium. And some of the structures underneath that salt are very large and Dukas, in particular, is in that multi-TCF category, where there could be multi-TCF of gas and very large quantities of helium. And just talking a little bit about helium and helium in the Southern Amadeus. 95% of the world's supply of helium comes as a byproduct of gas or LNG. It's extracted from the gas streams. And when this is done, levels of greater than 0.3% of helium in the gas stream is considered to be helium-rich. And what we have found from previous gas discoveries in the southern Amadeus, these are not theories, these are actual gas discoveries, is helium concentrations of very high orders of magnitude higher than 0.3%, at 6% and 9%. And they were found in those previous wells at Magee-1 and Mount Kitty-1. So this is what makes the Southern Amadeus so prospective for helium and also prospective for hydrocarbons. If we just look a little bit at the market dynamics for helium. We can see that's a very strong market at the moment. Global helium supply is around about 6 Bcf per day. And the bulk of that has been historically from the U.S., but that supply is declining as the strategic reserve declines. And the future supply for helium is reliant on LNG projects coming online. They're very large projects, and they often suffer delays. And so what we've seen in recent times is a supply shortage of helium into the market, and that's created very strong pricing dynamics around about $50 per Mcf up to $200 Mcf. So a really good time to be exploring in the Southern Amadeus because we're seeing natural gas prices in Australia, in particular, at very high levels. And then helium as a global commodity is also experiencing very high pricing. So if we move forward and look at what are the activities that we have planned in the Southern Amadeus, and they're all targeting this sub-salt play for hydrocarbons, helium and potentially hydrogen. I'll just as a side note, the Mount Kitty is in the process of being renamed to Jacko Bore. So if you see the 2, they're essentially interchangeable. So the previous discovery at Mount Kitty-1, we are planning on following this up with Mount Kitty 2, where the well will be drilled down to that same discovery zone, and then we will have a lateral in that zone to test the productive potential of that previous discovery. So that's a good well to look forward to. The second well in the program is Mahler 1. So the previous discovery at Magee was also in the permit EP82 and Mahler 1 is a larger structure, but targeting the same play that was successful at Magee 1. So there's 3 secondary targets in that well, on the way down to the primary target, which is the fraction basement underneath the salt. And then we have a follow-up well to Dukas-1. People may recall Dukas-1. People may recall Dukas-1 was a large well that had some very promising signs of hydrocarbons and other gases and overpressure. And ultimately, it was that overpressure that meant that the well could not be completed at that time. So the joint venture is coming back to drill Dukas-2 to target exactly the same play in this multi-TCF sized structure. So that will be very, very impactful well as we look forward to getting that well drilled. Santos is well underway. Santos is the operator, and they're well underway with procurement rig contracting and approvals activities right now to target getting these wells commenced in late 2023 or early 2024. And as you heard earlier, our funding for these wells is particularly helped by the farm-in by Peak. Peak Helium are obviously very attracted to the potential for helium in this basin, and they've farmed into both Santos' equity and Central's equity and are a key enabler for this 3-well program, which is about to get underway. So in summary, we're really looking forward to the exploration results from our Southern Amadeus exploration campaign. And in addition, we're also looking forward to watch Range because we expect that will continue to ramp up in gas rate over the near future. All right. Thank you all, and I will hand it back to Leon.

Thanks, Ross. Positive trends at Range and making progress in our sub-salt exploration program and, obviously, welcome developments. I'd like to take this opportunity to briefly comment on the domestic gas market. There's been a lot of volatility in the spot gas market. As you can see from this chart, the spot market settled from historical highs in the middle of last year to around $20 per gigajoule, which is still very strong. Since the beginning of this year, however, the spot market has been relatively soft. Part of this can be explained by 2 major LNG outages, which saw gas that is usually exported now being sold domestically. As a result, prices softened during this period to around $10 per gigajoule. You see in the chart that we currently have an LNG outage event, which helps explain why the current Wallumbilla Gas price is sitting below $10 per gigajoule. We don't expect the LNG outage to last past the end of this month, at which time we would expect spot gas prices to increase. The other event that occurred late last year is the introduction of the $12 per gigajoule gas price cap. Announcement of that regulation happened to occur about the same time as the first LNG outage shown on this chart. So the full impact of price regulation on both the spot and the term gas markets are yet to play out. Obviously, getting some clarity on future price calculations and the mandatory code conduct is needed to allow market participants to progress firm supply contracts. In the interim, we are meeting our existing firm supply contracts and selling our uncontracted gas into those spot markets with the best price signals. Finally, I need to acknowledge our recent poor share price performance. There are a few contributors to this. Clearly, our deep exploration program last year was very disappointing. We've been able to recover some of that investment through the lateral well at PV12, but not getting a technical result has fallen well short of what we had set out to achieve. Our Peak farmout has also been extended, really, so many times I've even lost count. It's very frustrating. But although things are moving forward and appear on track to complete this month, timing is still largely out of our control. We also announced the strategic review last year, which does create a level of uncertainty for investors as we go through that process. And Range has also been drifting in the background without anything really for investors to cheer about. We didn't get the immediate test results we had hoped for at Range last year, but we are now seeing positive trends in gas rates, and we'll continue this pilot testing. And finally price caps, punishing regulations and uncertainty around the role of gas in our energy mix going forward, all really created a very challenging landscape for investment in our sector despite periods of high gas prices. So clearly, our share price is currently reflecting a variety of strong headwinds at the moment. What I would like to highlight, however, is that these headwinds also provide great opportunity for positive near-term news flow, which could change that dynamic. First, we are working to complete the Peak farmout this month, which will provide certainty around our sub-salt exploration program. This will give investors an opportunity to put last year's deep exploration program behind us as we look forward to a new and potentially company-changing, 3-well sub-salt exploration program over the next year. Things are on track for that farmout. And again, I don't expect the need to extend anything past the end of this month. Second, as Mick mentioned, we are looking to make decisions in relation to the strategic review around midyear, which we hope will be positive for investors at that time. Ultimately, the objective of the strategic review is to find the best way to reward shareholders for their investment in Central, be it through share price growth, distributions or some other transactional outcome. Third, we are in discussions with several parties in relation to a farmout arrangement at Mamlambo and Zevon, and we do hope to close a transaction over the coming months to launch a fully funded exploration program that would include exploration wells at both Mamlambo and Zevon. So that is obviously a priority for us to get across the line in the near term. We're also continuing to test our range pilot wells in the hope that recent positive trends in gas production can continue over the coming months. This would give us a real boost in moving the Range gas project toward commercial success. And finally, I think the negative market sentiment for gas is overdone. Market fundamentals appear strong. And nothing the government is doing at this time seems to be addressing the gas supply shortfall, which is ultimately a strong determinant of future gas prices. And as Damian pointed out, in our financial results, strong gas prices that we have seen in the market, even over the past few months, have really been an important part of our financial position and have allowed us to continue to invest and move forward with exploration and growth projects. I can assure all of you that the Board and management team are very focused on achieving positive outcomes from each of these opportunities. And I look forward to updating investors on our progress over the next few months. On that note, I'll open the webinar to questions for the management team.

Okay. We'll try again. Thanks, guys. Sorry, had some technical difficulties there. So back on the questions, Leon, as I've mentioned there, there was a number of questions around share price, and I touched on that earlier, but maybe just to recap.

Yes, there's obviously a lot of interest in what's going on with the share price. I believe it's obviously in a trough. And as I've mentioned during the presentation, there's a number of headwinds that are contributing to where that price is at the moment. Some of those, as I've stated, really relate to the fact that we've come off a deep exploration program that was not successful. We have yet to complete the Peak farmout, which is obviously critical in giving us certainty and clarity on our sub-salt exploration program. [Technical Difficulty]

Okay. I hope -- I'm not sure if we're coming through. We obviously got some technical difficulties there. We'll continue on with the questions in the mean time without the video feed. So Leon, we were talking around share price, when it cut off.

Yes. So obviously, a lot of interest in where the share price is at the moment. It's obviously very subdued and that has caused a lot for investors -- as I mentioned during the presentation, I think we are at a essentially a trough. We've got a number of headwinds that we're facing those Range from the fact that we've come off an unsuccessful exploration program at Palm Valley and Dingo. The Peak completion hasn't completed at this point. And obviously, that's critical in giving us clarity and certainty around our sub-salt exploration program. Our strategic review is ongoing, and we anticipate having some decisions made midyear. At the Range, obviously, that has been fairly stagnant, although we are now seeing some very interesting technical developments at the field. And obviously, price regulation has had a fairly important or significant impact on the sector more generally. So as I've said, I think there's a number of factors that are contributing to the share price weakness. Our focus now is really looking at the opportunities we have for near-term news flow to try and reverse that and put some strength back into the share price. Our focus is on completing Peak farmout and getting clarity on the sub-salt exploration. That is not done, although I understand the key government approvals are in place. And I think there's some additional things that need to be rounded off before we can complete. I don't see a scenario where we need to extend that past the end of this month. So my expectation is that we'll complete within that time frame. The strategic review, obviously, we're working very hard on that. And as Mick mentioned, targeting middle of the year for some decisions there. And hopefully, those will be very attractive for investors in terms of options and opportunities moving forward. New farmouts is the other area that we're really focused on. We think that can give a good boost and really positive news flow for shareholders. If we're able to complete that, that would open the door for exploration drilling at Mamlambo and Zevon. Both of those are very large prospects with company-changing potential. Further Range testing. We've seen some good trends recently. We'll continue to test that. And if that is -- continues to look very good, that could have a very positive impact on how we move forward with that asset. It is part of the strategic review. We are looking at all aspects of Range, whether it's disposal, finding a new partner or putting further investment into it through appraisal. All of those are on the table. But certainly having good news technically is a real positive for how we move forward with it. And then market fundamentals, I think, getting clarity on the market and the regulation over the next few months will be a positive for the domestic gas sector. So look, I think we certainly are facing a number of headwinds, but we are focused on addressing those. And I think we have a pathway to have some real positive news flow for the share price over the next year.

Okay. Thanks, Leon. Another question here. Another announcement was made by Australia's Energy Minister yesterday over the concerns of the gas shortages in most states in Australia. So what is Central doing to capitalize on the constant gas shortages in Australia?

I might hand that over, we're doing quite a few things to increase gas production from our fields. Obviously, PV12 and the lateral there has been a real big boost for production. But I might hand over to Ross to talk about what else we're doing in the upcoming year to increase production for sales into that market.

Yes. Thanks, Leon. It's a good question. So you might recall, some months ago, we pivoted towards production capacity, and that was to capture the opportunity in the gas markets at the moment. So what we have underway right now. We have a recompletions campaign at Mereenie that's due to kick off in the field very soon. And that will be followed later in the year by a couple of development wells that we're planning to bring online. And then around midyear as well, we have a compressor that we're installing on site, which will capture some waste gas and reinject that waste gas into the sales gas stream. So we have quite a significant development -- quite a significant list of development projects that we will be bringing online through the course of the calendar year, particularly focused on Mereenie. And all of that is targeting that opportunity that we see in the gas market. So yes, good question.

Thanks, Ross. I'll also flag that, that activity, combined with the exploration program we have in the sub-salt area has really required us to take careful attention to cash flows, capital management. And that's something we've been very focused on over the past 12 months in order to allow us to both invest in new production, but also look for the opportunity to discover and bring new reserves to market.

Okay. Question here around Range. So our Range project, obviously, back in 2020, we started working on a Range FID. The question is, do we have a new forecast around FID timing, what's the most likely development of capital cost?

I can take that one. So certainly, the initial hope was that we would get a very strong and clear test results from our pilot wells that didn't eventuate, and we've been continuing to test and appraise the area of the step-out wells that we have more recently done. The positive gas rates that we are seeing from the test is obviously very helpful in informing us on how to move forward. We do need to obviously work closely with Incitec Pivot. And we are under this strategic review, testing the market and various opportunities for move the project along. Having said that, the I guess, the range of options for how we create value out of the Range project is very broad at this point. It's -- I think everything is on the table from disposal through partnering and through further investment in appraisal to move the project along. Don't have an updated timing for FID. I think really the best approach in terms of viewing progress on Range is both the testing that we have in the step-out pilot wells but also the likely need for another appraisal project to really prove up strong commercial dynamics for that project. So I guess the answer to how Range is going to move forward is somewhat going to depend on how things progress over the next few months. But as Mick did say, the intent and the hope is that we will get some decisions from the strategic review about midyear.

Okay. Another one, Leon. This is off the back of a question on share price, but it was more aimed at Dukas saying, asked, why has it taken so long to reenter Dukas? It was suspended at the time of increasing pressure, which is a fairly good sign of an underlying reservoir.

Yes. So Dukas has been something we've covered pretty consistently over the past few years since it was drilled. And obviously, we didn't reach the target formation. It's something that Central has been pushing, and we are keen to get a test result from Dukas. Having said that, Dukas is obviously part of a broader farmout arrangement between ourselves and Peak and also Santos and Peak. So in some respects, whilst it has taken a long time to get that redrill or activity at Dukas restarted, it is part of this farmout arrangement, which has taken time to complete and close. On the flip side, we have been progressing all 3 wells, both Dukas, Mahler and Mount Kitty. So the -- I guess, the time frame to get drilling activity across the sub-salt prospects is really as quickly as we can, which we anticipate in sort of the next 12 months to commence.

Okay. There's a question here, Leon, and I might be able to answer this one. It says, "When do you expect making a proper profit that will enable you to pay dividends?" Profit is a funny thing for us because we expense all of our exploration costs, we turn a very lumpy results. For example, we have EBITDAX, which is what we prefer to talk about, and it's probably not the proper profit you're talking about, but that strips out the impact of the exploration. So we made $5.3 million of EBITDAX in the first half, and we'll hopefully do better than that in the second half with the increased volumes and the better pricing. But the -- we had almost $11 million of exploration costs. So that sort of makes it difficult to post a bottom line profit, which can then be distributed as a dividend. So that's one of the key issues, obviously, that the strategic review is trying to address as to how we can get into a position where we can get some dividends back to shareholders. But that's something that's still being examined in much detail. And hopefully, we'll be able to find something that satisfies everyone in the near future. The question -- next question is around the Amadeus to Moomba Gas Pipeline. What progress have we made?

Yes. Look, that was obviously a pipeline connection that we're quite keen to see happen. It does require a fairly substantial reserve base to underwrite that project. Our hope was that with the exploration program at Palm Valley Deep and Dingo Deep combined with uncontracted gas at our existing fields, there would be an opportunity to provide that foundation volume and get things started. Obviously, the deep exploration program didn't get the results we were hoping for. And so really, at this point, the next step is to continue forward with our sub-salt exploration program and success from those and any reserves that we can find and bring to market that would obviously be classic candidates to help underwrite that piece of infrastructure. So at this point, really, there's -- it's on hold. It is a very attractive bit of infrastructure for us in terms of the ability to reduce transportation costs. But until the reserve base is there, it's really on hold, waiting for some success in exploration in the Amadeus Basin.

Okay. So a couple of questions around the drilling program, in particular, well, it is an easy one. What initiated renaming of Mount Kitty. Are there more renamings likely?

I can take that one. Yes. So as part of the preparatory work for drilling the Mount Kitty follow-up well. We've been on the ground and engaging with the traditional owners. And in one of those community engagement sessions, it was pointed out that, that area had particular significance and a more appropriate naming for the well would be Jacko Bore. So we've been engaging with the regulator to go through the process of renaming that. So that's where it came from.

Thanks, Ross. So whilst we're talking about that around the Peak farm-in, a couple of questions have come in. Just firstly, what gives us confidence that the farm-in will settle? It seems the market is not sharing your optimism with the time line being extended every month and your share price falling every time you announce a further delay. Can you confirm that Peak Helium has the funds? How are they funded?

Yes. So let me address the first one. The progress we've made towards completion, we're comfortable that things are moving forward and -- or where Peak have indicated they sit. I understand that the key government approvals now have been signed off. I think there's some more peripheral documents and approvals that need to be signed to mop up completion. But at this point, I don't see anything substantive that should be a problem getting this closed out prior to the end of the month. So again, as I've said before, I don't see a scenario where we would be needing to extend after March. And our focus and expectation is that we should be able to complete over the next couple of weeks. With regards to financial capacity, there was some DD that both ourselves and, I understand, Santos would have taken naturally in entering into the farm-out agreement. And again, we're comfortable that they have that ability. Obviously, we're not privy to more recent developments and activities. But nothing that we've seen indicates that, that is a problem at this time. Again, the farm-out does have some protections in terms of financial risk for joint venture partners. The key is being not committing substantial amounts of money towards activities without cash calling. And I think there's other protections, obviously, under the joint venture arrangements that give you some protection. And ultimately, at the end of the day, if a party is unable to fund their share, it ultimately can get relinquished back to the existing joint venture holders and any money invested would obviously be lost. So there's some natural protections, but we hope that's not something that really needs to be an issue going forward. Our focus is on getting completion and moving the drilling program ahead and getting stuck into getting results from sub-salt prospects.

Thanks, Leon. And I guess just closing off on the peak farmout this question here saying, will Central declare a fixed and nonnegotiable termination date for the settlement and signing of the farmout agreement with Peak Helium? If not, then why not?

Yes. So as I've indicated, I think the extension to the end of the month, I think we saw some merit in doing that. I don't see there being a need at this time for further extension. So again, we're operating on the basis that there's not going to be an extension past March and that this will complete ahead of that time. So that's really the basis on which we're moving forward. And what we've seen to date is, I think, consistent with that outcome.

Okay. There's a couple of questions here just around sort of Dukas and Zevon. This one here, let's talk about using the large rig required for Dukas to try to do Zevon at the same time. With the constant slippage of Dukas-2 drilling, why hasn't this been planned more effectively?

I can handle the rig part of the question. So Dukas -- the Dukas targets at about 3,900 meters. So it's quite deep. And with the potential for over pressure, that means we need a larger rig and a larger stack. Zevon is shallower. So Zevon is about 2,000-odd meters -- so whilst there may have been, I guess, some potential synergies, there's really not a big opportunity there. It would be a bit like using a sledgehammer to crack a nut if we use the larger rig on Zevon. That sort of addresses the question about synergies. What was the other part of the question?

Yes. Well, I think that's really it. But the -- I guess the other -- I guess it leads on then to the next question, which is are you expecting a joint venture at Zevon prior to commencement of drilling at Jacko Bore?

Yes, I'll pick that up. So we are in active discussions around farmouts that are focused on Mamlambo and Zevon. Zevon would be the candidate for drilling with the smaller rigs that you'd use for Mount Kitty or Jacko and Mahler. So there is some interest in once we can get a farmout in place, trying to see if there's an opportunity to tag on to that drilling program for Zevon. And obviously, approvals permitting have not been easier in the NT. So we've got to go through all of that process. But obviously, that is a good outcome if we can tag on and save mob and demob costs by attaching to that Peak Santos farmout drilling program. It's something we're certainly looking at.

And while we're talking about that sub-salt program, the question here, how long do you anticipate the sub-salt wells will take to drill?

Yes, I can take that. So Mount Kitty/Jacko Bore, to execute the lateral is about 30 days execution time for the well. And then obviously, contingent on a production outcome and there would be a production test that follow that, and that could go for a number of months. The Mahler-1 well is around about the same, so about a little bit over a month to execute the well. And then if that's successful, there would then be further activities around testing or potentially laterals. And then Dukas. Dukas as I said earlier, much more substantial wells, so that's about 3 months total execution time.

Obviously, those schedules are delinked with different rigs.

Correct. Yes. So Dukas is a different rig. But the Mount Kitty and Mahler are using the same rig.

And perhaps just closing off on that earlier question around Zevon and fitting in with Dukas. Obviously, Zevon is less mature. There's seismic that has to be shot before you would start to drill and, hence, it's living on a different time line to Dukas.

Well, certainly would be Zevon is much more akin to Jacko Bore and Mahler in terms of depth in the type of rate that's required. So the strategy would be to try and get some seismic and approvals for drilling in place. So that on the back end of that program, we could use that rig and get a well drilled at Zevon. Obviously, getting all of that to line up and to be coordinated is a challenge, particularly given the challenges we're seeing in the regulatory and environmental space in the NT for new wells, which has not been made easier. So that's something we're working toward. But ideally, we can make that happen. But in any event, we'll be looking to minimize the cost for whatever drilling program we put in place.

Okay. Maybe just to finish off on questions around that whole sub-salt program. Can we expand on the sub-salt potential, in a few words?

Yes, sure. I mean -- so we've been quite consistent about Dukas. Dukas has a very large structure. And so has multi-TCF potential. Specific volume metrics require specific sort of processes under ASX so that requires a fair bit of joint venture alignment. But suffice to say, the Dukas structure is significantly large and well beyond the TCF in terms of volumetric potential. And the other 2 targets are -- because they are a fractured basement play, they're a little bit less reliant on a particular structure, and it's more related to what is the productivity of the lateral and the fracture network that it can connect to. And then if that's a success, you then have the opportunity to sort of replicate that in the same sort of area within the basin. So all the targets certainly have good potential on the upside and Dukas, in particular, is a very large target as mapped.

Okay. So a couple of -- there's been a couple of questions here just around the strategic reviews. I think -- is there anything we can say or our key callouts from the strategic review, the process, comment here that June or midyear sounds a long way away. It's too slow to offer something to shareholders and investors. We need a firm date, a firm statement. Are we selling the company in total or piecemeal?

Yes. I would -- I guess my comment on that is midyear in the scheme of these types of transactions is really not that far away. The market is in the state of flux in many regards, both in terms of market fundamentals, regulation, volatility. So working through all of that and finding the best opportunities does take some time. And I want to reiterate what Mick mentioned earlier on, which is we need to get this right. And the options that we're looking at are fairly broad, and we've got a very broad net in terms of how we can crystallize shareholder value. So I think the midyear timing is appropriate for decisions and certainly something that we plan to work toward. But really specifying what the outcome would be, would be premature at this point other than to say we're looking at really all of the opportunities that there are to crystallize shareholder value. And obviously, there was a comment about dividends and distributions. That's something that is on the mind of everyone as we go through this process. Obviously recognizing that finding opportunities for shareholders to benefit from the value that we've created in the company is an objective that we'd like to achieve. So that's certainly something that we're working towards as well.

Okay. Here's a corporate-related one, Leon. How did the shareholder appointment to the Board come about? And what is his role on the Board?

Yes. I'll probably defer that question to our Chair, Mick, he's not with us on the live Q&A at this point. It's certainly something that you're welcome to send that question to Central Petroleum info and we can pass it on and try and get that response to you. What I can say is that the Board is functioning very well. The most recent changes to the Board, I think, have been constructive. And we've got very good alignment in terms of what we're doing at the moment on stay in business and creating value within the company now, but also the opportunities for the strategic review to again, crystallize value for shareholders going forward.

Okay. Now a couple of market-related ones. First one, can you confirm that all of the new Palm Valley 12 gas is going into the spot market?

Yes. So we have not contracted out any of the additional volume from PV12 on a terms by basis. We typically don't do that until we get a fairly good run of production data from the well, and we're obviously not there yet. The spot market has been largely attractive, although there have been some softer periods. But overall, it's been a very good outcome for our sales from Palm Valley 12 at this point. We are considering term sales from Palm Valley 12. But at this time, the uncertainty in the market caused by price caps and regulations and mandatory code of conduct have really, I guess, given us an opportunity to pause and see how that plays out before we focus on a longer-term contracting from Palm Valley 12.

Okay. Now there's a question around the outlook for the NT gas market more broadly, in particular reference to the Blacktip project and the problems they appear to be having there?

Yes. So the issues we saw with the NGP going down and Blacktip that is -- has been -- is being managed. It is still not resolved fully. There is a well, we understand, that was drilled. And that was, we understand, successful. It is being hooked up. It's not hooked up yet. You might notice that the NGP is currently out. That has to do with a customer outage on the other side of the NGP. All of that we understand will be resolved over the next few weeks. And from 1st of April, the Blacktip well should be online. Customers should be back online, NGP should be back open. And the Northern Territory market and transportation systems should be back to normal. And we understand that the, I guess, production from Blacktip, those issues should be managed as a result of that additional well that was drilled. So a little bit more time to get it fully resolved, but not too much. And really, by the start of April, I think we'll see things settle down and become much more like they have been in the past prior to this disruption on the NGP.

Okay. Thanks, Leon. So I think we've got time probably for one more. There is just one more question. One of our viewer is asking, while domestic gas supply has recently increased their gas selling price by 35%, now averaging $0.03 per megajoule, how does this compare with the price you receive? So I think the conversion to gigajoules, I think, is about 1,000. So that's about $30 per gigajoule. And we -- I think you'll see our current average price that we received was around $7.50 in the last quarter. So there's quite a margin there, obviously there's pipeline costs that have to get paid for and passed on. But obviously, we're not getting the $30, unfortunately.

Well, not all the time, not as an average. There have been periods where we have received very good spot market prices. There's a very significant difference between wholesale gas prices that we see and retail prices that individuals or smaller customers will see and there's a lot of hands in the trough and pipelines along the way that will take a cut that does create that gap. Having said that, the prices that we have been seeing are substantially higher than what they have been historically. And they do follow somewhat the trend that we all see when we open up our energy builds, I mean, it has gone up. I will say that cost of production are also going up substantially. The requirements for compliance with environmental and other regulations that are being placed on the gas sector, in particular, have increased costs dramatically. The investment has slowed down as far as we're aware, as a result of the uncertainty in the gas price regulation. So as I mentioned early on, I think the fundamentals are still strong. We have been seeing strong gas prices that are materially higher than what we've seen historically in the past. We expect that to continue. And as we pointed out in the spot market, there are some periods where it's been fairly soft, but we think those are temporary and really as a result of the LNG outages. And really going forward, it will be interesting to see where that spot market settles, given the product regulations and the current market dynamics within the Australian domestic gas market.

Okay. Well, good news, there's no more questions, Leon. We've reached the end of the line. So thanks to everyone, who's persevered through our technical issues and hope those Q&As were a benefit to everyone on the line.

Yes. Thank you, everyone, and we'll try and edit this version, so we cut out the technical issues, and we can put it back online. So those that didn't hang around can have an opportunity to hear the Q&A. And again, we look forward to updating the market as things progress. As I mentioned, I think we have a very good list of objectives to achieve in the near term, which I think could be very positive news flow for investors in the share price.

Okay. Thank you very much.

Thank you.