Central Petroleum Limited (CTP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the 2024 Annual General Meeting of Central Petroleum Limited. I'm Mick McCormack, and I am the Chair of Central Petroleum Limited. I will be chairing this meeting today in accordance with the company's constitution. In accordance with the Corporations Act, today's AGM is being held in person here at the Christie Centre in Brisbane and as a virtual online meeting via the Computershare meeting platform. Before we start our official proceedings, for those in attendance here at the Christie Centre, I ask you to please note the emergency exits for this room, which is via the entrance door to my right. Please note the basic fire and evacuation procedures, which we have put up on the screen. In the event of an emergency, please follow the directions of the Christie Centre staff, and I assume that they are here somewhere. Outside? Great. I also wish to advise all attendees that these proceedings are being audio recorded. It is now 10:00 a.m., and I have been informed by the Company Secretary that a quorum is present, so I declare the Annual General Meeting properly constituted and open. As this meeting is being held both in person and virtually, there are a number of process matters which I would like to bring to your attention. Firstly, for those shareholders and proxy holders who are online, your questions can be submitted at any time. [Operator Instructions] Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. At the relevant time, Central's Chief Financial Officer, Damian Galvin, will be reading out the questions submitted online. Please also note that your questions may be moderated or if we receive multiple questions on one topic, amalgamated together. For those shareholders online who wish to ask a verbal question, please follow the instructions written below the broadcast. For those in attendance here at the Christie Centre, you'll be afforded the opportunity to ask questions, and I ask that at the appropriate time, you direct your questions to me. Accordingly, after each item is read out, I will invite comments from the floor. However, please note, I will be limiting questions to the item of business being considered. I would also ask that you state your name for the record when you address the meeting. Upon conclusion of the meeting formalities, shareholders will also be given the opportunity to ask additional questions of the Board and the company's senior executives. Finally, due to time constraints, we may run out of time to answer all of your questions. If this happens, we will answer them in due course via e-mail and posting responses on our website. Voting today will be conducted by way of a poll on all items of business. In order to provide online attendees with enough time to vote, I will shortly open voting for all resolutions. At that time, if you are eligible to vote at this meeting, press the vote icon and all resolutions will be activated with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. You will receive a vote confirmation notification on your screen. You do, however, have the ability to change your vote online up until the time I declare voting closed. For shareholders and proxy holders in attendance here at the Christie Centre, when you registered at the attendance desk this morning, you should have received a card from Computershare. Shareholders and proxy holders holding a blue card can vote and speak at the meeting. Shareholders holding a yellow card are not eligible to vote but can speak at the meeting, and visitors who are not eligible to vote or speak at the meeting. If there is anyone present who is eligible to vote but has not received a blue card, please see a representative of Computershare now. On the reverse of your blue admission card is your voting paper and instructions. You will note that item 7 is a contingent item of business, which will apply if and only if at least 25% of the votes cast on the resolution in item 2 are against the adoption of the remuneration report. Accordingly, if at least 25% of the votes cast on the resolution in item 2 are against adopting the remuneration report, this will constitute a second strike and the resolution in item 7 will be put to the meeting and voted on as required by Section 250V of the Corporations Act. If less than 25% of votes cast on the resolution in item 2 are against adopting the remuneration report, then there will be no second strike and the resolution in item 7 will be deemed to have been withdrawn, resulting in the resolution not being put to the meeting for vote, with any votes not counting towards that resolution. I will now go through the procedures for filling in the voting papers for those shareholders here at the Christie Centre. Proxy holders have attached to their admission card a summary of proxy votes, which details the voting instructions for business items on the appointment documents in your favor. By completing the voting paper, when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. In respect of any open votes a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. Proxy holders should refer to the summary of proxy votes form attached to your voting paper for further information. Shareholders also need to mark a box beside the motion to indicate how you wish to cast your votes. Please ensure you print your name where indicated and sign the voting paper. When you have finished filling in your voting paper, please lodge it in a ballot box to ensure your votes are counted. In respect of voting at today's meeting, a, on a poll, each member online or present in person or their proxy, attorney or corporate representative has one vote for each share held; b, only one vote is allowed per joint holding. If more than one joint holder tenders a vote, the vote of the member named first in the register must be accepted to the exclusion of the others; c, if a proxy has been directed to vote in a particular manner, if the proxy is entitled to vote, he or she must vote in accordance with the direction; and d, for some items of business, certain votes will be disregarded as explained in the voting exclusion statement in the Notice of Meeting. The persons entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold blue admission cards or who duly attend online. The order of business will be that I will read out each item of business in turn and take questions on that item of business, noting that item 7 is contingent. For those here in person, I will then defer voting until the end of the meeting, at which time I'll explain the voting procedure for the poll to be conducted for the resolutions on items 2 through 6 and if required, item 7 using a blue voting card. Importantly, for those online, should you require assistance with the technology, please call Computershare Investor Services on +61-3-9415-4024. And if you require any assistance here at the Christie Centre, please raise your hand. I now declare voting open on all items of business with voting for item 7 open on a contingent basis as explained earlier. For those online, please submit your votes at any time. I will give reminders to vote after every resolution, and I will give you a warning before I move to close voting. So firstly, let me introduce you to our Board members: Leon Devaney, Managing Director; Stephen Gardiner, Non-Executive Director; Kathy Hirschfeld, AM, Non-Executive Director; and Dr. Agu Kantsler, Non-Executive Director. In addition to our Board, I'd like you to be introduced to a member of our Risk and Sustainability Committee, Mr. Bob Liddle. Bob's face is on the screen there. Bob was first engaged by Central Petroleum as a consultant over 17 years ago. Born in Hatches Creek and a member of the Arunta tribe of Alice Springs, he has played a key role as an adviser in the negotiation for oil and gas fields in the Northern Territory and maintaining local relationships for Central. Interestingly, the Board recently was up on a field to Alice Springs and didn't realize that about 40 years ago, Bob did the land clearing on the Amadeus Basin to Darwin pipeline that I first entered the industry with. So we renewed acquaintances after a very, very long time. Also present is Company Secretary, Daniel White. I would also like to introduce you to Central's Chief Financial Adviser, Damian Galvin, right in the corner. I'd also like you to be introduced to Mr. Marcus Goddard, our auditor from PricewaterhouseCoopers; and Mr. Lewis Brimelow, Relationship Manager of Computershare, the company's share registry down the back there. Right. Now we've finished all the introductions thankfully. We'll get on to real business. I'll present my Chairman's address. Standing here today, I have a sense that Central's outlook is more positive than it has been for some time. As I look back over the year, we have seen 3 important developments, which should result in sustainable positive cash flows and ultimately, returns to shareholders. Firstly, we've seen a shift in gas markets, particularly in the Northern Territory, where a supply side shortage has seen Central's onshore gas fields currently supplying about half of the Northern Territory's gas demand. This is now more critical than ever to the region's energy balance. Central's proven reserves and history of reliable production resulted in a successful marketing campaign that will see all of our firm gas production sold at a higher price than historical averages into the Northern Territory from January 2025 through to the end of 2030. The importance of these new contracts cannot be understated with a step change in pricing from maturing legacy gas contracts promising increased free cash flow. These contracts greatly reduce our exposure to pipeline outage risks, which unfortunately impacted our results this year. Secondly, our decision to exit from the Range gas project in Queensland has reduced our future capital commitments, and this, in turn, has strengthened our balance sheet, with $12.5 million in cash proceeds reducing our net debt. At the end of the year, we were in a positive net cash position the first time in a decade. And lastly, the cash demands to service our various forms of debt have declined significantly over the past 5 years, and we now have a clear line of sight to being completely debt free within 5 years. We have fully repaid one of our -- one of the debt layers, the presold gas, which was used to fund new production wells 3 years ago. And we are now selling this gas volume previously dedicated to repaying the debt into a stronger market, giving us a boost in free cash flow. Our stronger balance sheet, when combined with the contractual certainty from the new multiyear Northern Territory focused gas contracts and stronger market pricing, facilitated our recently announced bank loan extension, giving us confidence in our forward cash flow projections to fund high return investments to increase field production and to consider returns to shareholders. We intend to provide more clarity to shareholders and the market on Central's shareholder return strategy with a view to making an announcement on this in the near future. The value of Central's producing assets is becoming more obvious in the gas supply constrained market and the recent transaction, which saw New Zealand Oil & Gas, now called Echelon Resources, and Horizon Oil purchase Mereenie -- sorry, purchase Macquarie's 50% interest in the Mereenie gas field for around $100 million. This confirms the value that we see in these assets. While our producing assets look certain to contribute to increasing free cash flows in coming years, we're also working to realize value from our extensive exploration holdings. The helium, hydrogen and natural gas potential of the sub-salt prospects could be company changing, and the potential value of these prospects is too great to ignore. Our strategy is to fund programs and farm-outs where possible to spread the risk and costs while preserving material upside for our shareholders. Finding new participants for exploration in the current market requires some patience. However, we are continuing our discussions with several interested parties. We are progressing discussions on a possible Mereenie helium recovery unit, and this could spark renewed helium exploration interest in the basin. Turning to our financial performance for the year. Unfortunately, the underlying financial results were impacted by the pipeline-induced disruptions to production, which were both unexpected and outside of Central's control. However, the new gas sales contract I mentioned earlier will largely mitigate that risk over the 6-year term of that contract. With our strategic review completed and outcomes now being executed, we farewelled director Troy Harry from the Board this year, and I thank him for his significant contribution and welcome his ongoing support as Central's largest shareholder. I also thank CEO Leon Devaney together with his management team and staff for their contribution in safely and efficiently operating our 3 gas fields. We also greatly appreciate the continuing support and cooperation of the people, suppliers, local communities and the traditional owners of the land on which we operate. Their combined efforts allow us to continue to provide a reliable and affordable supply of energy to the businesses and residents of the Northern Territory. On a closing note, we have responded to last year's AGM shareholder vote against our remuneration report by making significant changes to the remuneration structure of our executive team for financial year 2025 and beyond. The CEO's remuneration package has been re-weighted with lower fixed remuneration and new at-risk incentives with higher fixed share price appreciation hurdles. The pay of other executives has been frozen at the 2024 level, and we have retained a smaller executive team, 4 rather than 6, and Board, 4 nonexecutive directors down from 5, than we have in the past. Short- and long-term incentives have been revised, including an equity-linked component that now only rewards a significant increase in share price over 3 years, requiring around a 50% increase in share price to $0.08 per share over 3 years to reach the minimum threshold and only reaching the maximum award if the share price more than triples to $0.16 over the 3 years. All up, I believe we've made tremendous progress this year implementing the company's revised strategic objectives with financial strength and visibility towards sustained returns to shareholders. The future of Central is looking exciting and positive. Against this backdrop, this will be my last AGM at Central as I've advised the directors that I intend to step down and leave the Board within the next 12 months after ensuring a smooth transaction. On that note, I sincerely thank my fellow directors and the Central management and staff for their support during my tenure, and I'm immensely satisfied with what we've achieved in recent years, and I look forward to seeing news of more success for Central as the year unfolds. With that, ladies and gentlemen, now let me introduce you to Leon Devaney, who will present his Managing Director's presentation. Please hold your questions until Leon has finished his presentation. For those online, you can submit your questions online at any time, and Leon will respond at the end of his presentation. Thank you.

Great. Thank you, Mick. Appreciate that. And good morning to everybody. This last year, and in fact, at the last AGM, I spoke a lot about how we can be optimistic about the upcoming year for Central Petroleum. We had a lot of good things to look forward to, and I did lay out some of the reasons for those. Soon after that, in February of this year, we completed a strategic review and highlighted our objectives of maximizing cash flows while progressing exploration through farm-outs with a promote structure. Over the past year, we have worked diligently to successfully implement this strategy and seize new opportunities. Today, rather than talking about optimism, I can show you how our efforts to reduce costs and lock in long-term sales under a new GSA have now come together to give us the financial strength to invest in growth and consider shareholder returns. I'm confident this transformation in our business fundamentals will become increasingly evident and appreciated by the share market in the coming months. Okay. Let's begin by looking at our accomplishments over the past year. We successfully sold our Range gas project, boosting cash by $12.5 million. Our balance sheet is now stronger with a positive net cash position. We cut costs, reducing corporate and G&A spending by $1.4 million. We eliminated about 30% of our liability costs earlier this year after paying off our presale liability. We secured commitment for a fully amortizing 5-year debt refinancing. We commenced a 2-well drilling program at Mereenie to increase production. And most significantly, we capitalized on changing market dynamics to secure a transformational gas supply agreement. We also delivered exceptional operating performance across our 3 gas fields, managing some of the most remote and extreme conditions in Australia on behalf of 3 joint venture partners. Our commitment to supporting the communities where we operate remains steadfast. We delivered reliable gas supplies to our customers while maintaining an environmentally responsible approach. Above all, safety has been a cornerstone of our operations. Our total recordable injury frequency rate for the past 2 years has been 0. This is a commendable milestone in workplace safety and a testament to the dedication of our team. However, this year was not without its challenges. Extended outages in the Northern Gas Pipeline, or the NGP, impacted our production and revenues over the last 18 months. Additionally, the gas sector in Australia continue to face headwinds, including ongoing climate change narratives advocating for the end of hydrocarbons. That said, there are encouraging signs that a shift in prospective views in the sector are happening now. And this is through a growing recognition that gas plays a vital role in Australia's transition to a lower carbon energy mix. As evidence of this, we just recently engaged with the new Northern Territory government to explore regulatory improvements that will support our operations to provide reliable energy to customers in the Northern Territory. The 2 key achievements I will cover in this presentation that I think are particularly important are the reduction in our liability costs and the major new GSA that we signed just in July. Looking at our 2024 results. As we highlighted in our annual results webinar for 2024, performance was solid despite the challenging poses -- challengings that we had posed by extended unplanned outages in the NGP. And you'll recall the NGP is what allows us to transport gas from the NT to customers in the East Coast. Revenue reached $37 million with EBITDAX coming in at nearly $14 million. These results were broadly in line with fiscal year 2023 after accounting for approximately $4 million in lost sales caused by the NGP outages. On the cost side, we continue to operate efficiently, illustrated by the charts on the bottom. Corporate and G&A expenses fell by $1.4 million. We maintained an executive team of just 4 members, down from 6, which had been our historical average. And exploration expenses were modest and consistent with our focus on exploration through farm-outs on a promote basis. These cost reductions underscore our commitment to disciplined financial management. Moving on to our balance sheet. Our balance sheet continued to strengthen over the past year. As of last quarter, we reported a cash balance of $25 million. And for the first time in a decade, we are in a positive net cash position of approximately $2 million. I want to draw your attention to the chart at the bottom right, which shows our annualized total liability servicing costs. You can see a steady reduction of debt and gas-in-kind liabilities over the past few years. These costs peaked in -- 5 years ago following a major expansion of the Mereenie gas field. Since then, we've taken a disciplined approach to paying down these obligations. In addition to this, we recently secured commitment for a fully amortizing refinancing facility with a 5-year term, giving us financial security. Under this facility, the annualized liability costs in 2025 are projected to be 70% lower than their peak and approximately $10 million lower than compared to 2024. We're scheduled to repay this facility in 5 years, at which point we don't have any debt or gas-in-kind liability servicing costs. This, again, frees up significant cash flows for us going forward. This step change improvement in cash flow will start to become visible in the next year. Moving to the NT gas market, which I think is a very important subject for everybody and all the investors in Central to understand. The tightening gas markets in the East Coast have received a lot of attention, and you no doubt would have seen a lot of coverage on it. Recent reports have suggested that the East Coast gas market could be short within the next couple of years. What hasn't received attention, however, is that the Northern Territory gas market has, in a very short period of time, moved from a surplus gas market to a gas market now reliant on expensive alternative gas supplies from LNG producers. This chart provides a clear illustration of these dynamics at play. The stacked areas represent the NT gas supply by source over the past 4 years. Let's begin with the green section at the bottom, which reflects production from our Amadeus Basin gas fields. This output has been consistent, contributing about 40 TJs a day. And again, this is in the context of an NT gas market ranging between 60 and 80, so almost half of the total demand. Next in blue is production from the offshore Blacktip field, historically the dominant gas supply for the NT. The black horizontal line in the middle represents the NT's average gas demand, which is seasonal and ranges between 60 and 80 TJs per day. Throughout 2021, total NT gas supply exceeded 100 TJs per day, well above the local demand. This surplus enabled the NT to export gas to the East Coast via the Northern Gas Pipeline. However, in 2022, we observed a rapid and unexpected decline in Blacktip production. By the end of that year, NT production could no longer meet both NT demand and East Coast exports. This led to extended outages of the NGP represented by the shaded vertical bars on the chart. What you'll see here, these bars, which is when the NGP was closed, you'll see we had a corresponding hit in our production. The reason for that is simply because we could not sell gas to our East Coast customers on the NGP. We had to divert that gas that was not being sold now to the East Coast, try and find a home for it in the Northern Territory. And as you can imagine, the Northern Territory is a small market. It's not liquid. It takes time to find customers because they tend to contract on multiyear GSA terms. So that was a challenge that we've had over the past 18 months and something, I think, we've done a great job working through. And I've mentioned before, it did have an impact on our sales and revenues. Over the past 18 months, the decline in Blacktip production has been so severe that the East Coast exports have now entirely ceased. And what you see is the NGP has been offline most of this year. It should be offline for the balance of this year. And we do not have a lot of visibility or confidence that the NGP will actually come back online next year. So it is a big problem. It is a huge factor in the NT gas market, and it is something that we have had to work around and look for alternatives and try and solve over the past 18 months. To meet local demand, the NT has increasingly relied on alternative, more expensive sources of gas, including tail gas from Darwin LNG's Bayu-Undan field, which is in the chart in orange, and diverted INPEX LNG, which is in the chart in red. INPEX LNG is currently supplying half of the NT's total gas demand, about 40 TJs a day. With Wallumbilla LNG netback index currently around $19 per gigajoule, we expect prices for these alternative supplies to be materially higher than the NT historical sources of gas that the market had been reliant on previously. The NGP has also responded to this changing market by enabling reverse flow, which allows them to instead of deliver gas to the East Coast, they can actually bring East Coast into the Northern Territory market. We have not seen any of these imports being used to date, although it is there for, I think, emergency or fallback scenarios where they do require additional volumes. We do expect that this supply, the imports from the East Coast, will also be relatively expensive as it would include transportation costs on top of an already elevated East Coast gas price. Simply put, the NT's growing reliance on high-cost alternative gas sources to meet its current demand has had, in a short period of time, driven gas prices up quickly and significantly across the region. So what does this mean for Central? Earlier this year, against the backdrop of these expensive alternative gas supplies, we, along with our joint venture partners, initiated a process to sell all of our uncontracted firm gas production over the next 6 years. This effort culminated in a transformational gas supply agreement with the Northern Territory government, which starts in just 6 weeks, so from the 1st of January. This new agreement strengthens our financial future and positions us to thrive in this new and evolving gas market landscape. Let's take a look at the NT gas supply agreement itself. It is for firm supply. Central's share is up to 12 petajoules over the next 6 years. This volume is highlighted in orange on the chart, and it does cover our existing uncontracted firm production through 2030, plus additional gas that we anticipate from the 2 new Mereenie wells that are currently being drilled over the next few months. The GSA features fixed pricing with CPI escalation and an ex-field delivery point, ensuring a strong and reliable revenue stream, which derisks us from the volatility we saw in revenues over the past year. That was one of the key objectives out of this EOI, and we successfully were able to achieve that. Importantly, we executed the contract in July. So the price reflects the new Northern Territory gas market paradigm that I just spoke about. The GSA also mitigates our exposure to future NGP outages in 2 key ways. First, it provides revenue security in 2025 by purchasing volumes associated with East Coast customers next year when the NGP is offline and we cannot otherwise deliver that gas. This volume is represented by the striped bar in the 2025 segment of the chart and addresses what had become a quickly approaching financial risk for the company. So that's essentially this volume here. That should be going to the East Coast on the current sales. The NGP is closed, and we can't sell it to the East Coast. This will roll up into the NT gas supply agreement. We are able to sell it on a firm basis at that price and be assured that we have the revenue stream. So where previously, we were concerned about how much of that revenue we'd be able to get depending on the NGP, we now have that locked away either way, whether the NGP is open or whether it's closed and the revenue stream will be there. So that was one of the critical objectives we wanted out of this EOI process, and we successfully achieved that. The second is by selling gas into the Northern Territory market on an ex-field basis. We are, therefore, now not dependent on the NGP for these sales going forward over the next 6 years, so again, derisking the impacts associated with the NGP being offline and not available for our transportation to the East Coast. A final point I'd like to make on the GSA is that it can expand to include additional production from a 2-well drilling program that is about to commence at Mereenie. We're weeks away from starting to do that, starting to spud. Increased production from these wells is anticipated to commence in Q1 of next year. So it's just around the corner. That additional production will increase our -- obviously our sales, and it will feed into the new NT GSA at that prevailing price, again, giving us some strong revenue streams from that activity, which is fantastic. So let's take a look at Central and what I call a new locational advantage. The new GSA is a significant milestone. There's much more to be done as we navigate the evolving NT gas market. We have more than enough gas and a lot of gas that we would like to bring to market in the next year. One of the key opportunities is drilling additional wells at Palm Valley. Planning and approval for 2 horizontal wells is already underway to ensure we are positioned to respond quickly to future market opportunities. The other is appraising and potentially developing the Mereenie Stairway formation, which could significantly increase Mereenie's production capacity and field life. These are infield activities. They leverage off surface facilities. We've got camps. We've got resources. So the marginal production costs and the capital investment for these tend to be relatively low and the margin's obviously relatively high. So these are very valuable sources of new gas if we can bring them to market. The other is appraising obviously the Mereenie Stairway formation. Again, it's a large formation that has a 2C resource. We do want to continue to work through that. And we think there's a lot of opportunity there to, again, bring Mereenie up in terms of production and field life, so a very exciting opportunity there. We're discussing these potential new gas supplies with market participants to support a final investment decision, which will be made in collaboration with our joint venture partners. Of course, we are not the only ones responding to the NT market, not surprisingly. The Blacktip field is expected to drill a new well in the coming months to boost production. We anticipate that even with this effort, Blacktip's output will remain below its historical levels. Appraisal from the Beetaloo is progressing with 2 drilling programs that could introduce a new gas supply source in the NT. Initial results from these programs are expected early next year, but given the inherent risks, costs and development time lines, any material production from the Beetaloo is uncertain and in any event, appears unlikely before 2026. Finally, the NGP reverse flow capability now allows gas to be imported from the East Coast, obviously, another source for NT customers. In the absence of any other new NT gas supply sources, imports could address future shortfalls, although we expect imported gas to be expensive given the already elevated cost of East Coast gas prices and the need to include significant transport costs to get it from the East Coast all the way into the NT market. In summary, while the NT gas market has undergone fundamental changes in just 2 years, it remains in flux. The coming year could provide new and significant market opportunities for Central as customers continue to look to secure reliable long-term gas agreements from suppliers like Central who have proven reserves. Moving to growth opportunities. We have established a strong foundation with our new GSA, but our work is far from complete. Over the next year, we aim to expand our role as the NT's most reliable gas supplier. Beyond the growth opportunities I've already outlined at Palm Valley and Mereenie, we are pursuing an avenue for revenue diversification through the helium production unit at Mereenie. The helium recovery project was delayed during the year due in part to the extended NGP outage, which introduced a new risk to the project as helium -- the helium project relies on stable production rates to generate their helium production and sales. So the NGP uncertainty obviously flowed through and had an impact on the HRU. With the new GSA now mitigating the risk of NGP outages over at least the next 6 years, I expect progress to pick up pace from this point forward. Our exploration portfolio remains substantial and continues to be an important pathway for future growth, particularly in light of our locational advantage within a tightening NT gas market. Over the past year, we have prioritized farming out our sub-salt permits to restart exploration and appraisal drilling, targeting helium and hydrocarbons in large prospects that have company-making potential. In collaboration with our joint venture partner, we have been actively seeking new farm-out parties following Peak's exit from the permit last year. Consistent with our strategy, we aim to fund this sub-salt exploration through farm-outs and under a promote structure. This has been something where we've seen a lot of positive interest, and I remain confident we can restart exploration drilling in these permits in the not-too-distant future. Right. So in conclusion and wrapping up, this has been a year of transformation for the company. We implemented key strategic objectives. We navigated challenges with resilience, and we executed a successful gas marketing strategy during a point in time where we have been able to lock in forward revenue streams that are significantly more robust than what we have seen historically from the field. Critically, we reduced costs and locked in future cash flows to give us the financial strength to invest in growth and for the first time, consider shareholder returns. As we look ahead, we are committed to building on this momentum to create more value throughout our portfolio and to deliver on what we believe this company can ultimately achieve. Thank you for your continued trust and support, and I look forward to sharing our successes with you in the coming year. I think, at this point, I'm happy to take any questions from those in the room or from online participants. Damian?

Nothing here at the moment for online.

Okay. I must have covered everything. [ Michel ]?

Very good presentation, very articulate [indiscernible]. Maybe just this industry struggles with one big issue, capital allocation. And it looks like you're about to embark on some drilling at -- around Mereenie, expanding the resource. Can you just give us a sense on how you think about sort of returns that you're trying to target or use as a threshold for your investment decisions? You can think about it as a percentage or you can think about it as an F&D cost. Either way it works, I suspect. But it's a big question, capital allocation. And then shareholder distributions, there's reference to that a few times in both your speeches. So anything else you can elaborate on if you can?

Yes. No, absolutely. I probably won't be in a position to provide what we see as a joint venture hurdle rate for these investments. I think we've got 3 other joint venture parties that need to come to the table and approve these activities. Now having said that, we have been active drilling wells at Palm Valley in the past, active at drilling Mereenie wells in the past. And that was within the context of the legacy NT gas market. What we're seeing now is a substantial uplift in gas prices caused by these shortfalls from traditional sources and reliance on more expensive alternative sources. Within that paradigm, we're of the view that these are fairly compelling, if not, very compelling. The critical things for us are to ensure that we have offtake arrangements that underwrite the production from these wells. So what we don't want to do is put a bunch of wells in, have the market moving away where the NGP is still not open, but the NT market is satisfied from potentially Blacktip or Beetaloo, and we're competing in a very oversupplied market, and the prices are nowhere where we would expect. What we're trying to do now, and this is similar to what we've done in locking away all of our uncontracted volume through 2030, which provides us a great foundation and base revenue stream, is to continue to play in the market, continue to talk to customers and be ready to respond quickly to lock in gas supply agreements that allow us to confidently drill these options with the kind of rate of returns that we would require to make that investment. So that's an active work that the joint venture is currently doing. But these new prices certainly have helped and are very encouraging in terms of my expectations that these opportunities to increase production into a very short market, as you can see, will be compelling, and we can ultimately get these across the line. What was the other question? You probably have one more. What's that?

Shareholder distribution [indiscernible]

Yes. So a few things. We've obviously cut costs, which is great. We paid down, over the past 5, 6 years, aggressively paid down debt, which shareholders have been very accommodating and patient with as we've taken free cash flow from operations to pay that down. We're at a point now where, as I said, it's 70% off where it was in the peak just a few years ago, even next year will be $10 million or about half of what it was in the previous year, which I think is really important in terms of freeing up cash flow. We've also got a new GSA that kicks in on the 1st of January. So the combination and the confluence of those cost reductions, combined with an increase in the headline price for the gas that we will be selling going forward -- and again, it will take time for this to trickle through as those GSAs come online and we start reporting them. But it does give us quite a bit of flexibility to reinvest in growth but also to consider strategies for shareholder returns. And that's something that the Board is going to be working through and considering over the next few months. Damian?

Leon, we've got a question online here from [ Scott Ashton ]. Leon, could you elaborate on the expected likely margin increase under the new NT government contracts over the midterm? Also, can you perhaps explain what the dollar per gigajoule advantage the Amadeus Basin has over the East Coast gas going into the NT market?

Yes. Good questions. And one of the things to avoid complicating this presentation, I didn't show our margins. So our headline portfolio gas price has been just under $8. Out of that, I think our margins have been floating around [ $3.50 ] or something of that nature. Increases in the headline gas price -- and I obviously can't disclose what that is for confidentiality reasons, but there have been a lot of forecasts about it being, as a ballpark, in the $10 range. Even if you took that number, that's $2 increase at the headline rate. Most of our costs are fixed. So you'd expect a large portion of that to be able to drop down to margins. If you add a large component of that $2 uplift to the [ $3.50 ] margin, you can see you get a leveraged -- a highly leveraged impact on your margin and as a result, on your free cash flow coming out of the operations. And that's one of the biggest things. It's almost a doubling of the leverage of the gas price relative to the impact on the quantum of our free cash flow going forward. So that's an important part about it. We'd expect the margins to be able to uplift quite considerably on the back of stronger and stronger headline prices for our gas. The other question was?

Just on the margin -- or the cost difference for East Coast gas coming into NT.

Yes. And that's when I referenced locational advantage previously. And getting the connection to the East Coast was a fantastic piece of infrastructure for it. It allowed us to have confidence that we could increase in production adds and be able to sell all of that, whether it's into the NT or, alternatively, into the East Coast market, in which case we weren't leaving gas in the ground. With the NT physically short, we've got the confidence now, particularly with this new GSA, that our gas can go directly into the NT, all of it, and that's where we're certainly working towards. The alternative supply for East Coast imports would mean you'd have to pay the East Coast price, which is not cheap. Obviously, there's been a lot of upward pressure on the East Coast price as everyone would have been aware of. But there are a few dollars of the transportation cost to get it from, say, Wallumbilla up to [ Carpenteria ] over the NGP and then on the AGP to wherever the customers are there. For us, we've talked about our locational disadvantage when we sell our gas to East Coast customers of being about $3 or $4. And so obviously, we don't know what their transport arrangements are, but I would imagine it's in that sort of order of magnitude. That's on top of what they have to pay for the gas at, say, Wallumbilla or wherever it's sold in the East Coast market. And that's a big number. That's a significant number. And that's what I mean by locational advantage. The competing gas has to pay that additional transport. Delivered price is higher in the NT. We don't have to pay that transport. So our ex-field pricing is essentially much, much closer to that delivered price that the alternative gas supply will be. So it has a huge impact on our ex-field pricing going forward as these dynamics move and I said, even a leveraged impact on our margin as we sell into these contracts more and more over the years.

A lot of investors are interested in the company making sub-salt plays that you talked about earlier. Can you give us a bit more information on that, particularly around the kind of information that the JV partners are talking about for drill procurement, drilling timing for Dukas and how the farm-in prospects are looking for those sub-salt plays?

Yes. So we are in a joint venture with Santos. In going out to the market, the focus has been on Mount Kitty from investors. A lot of that has been from parties that are interested in the helium aspect of the play as opposed to maybe the hydrocarbon. There's both there, and I think they both drive the value proposition for it. The -- I guess the opportunity there is to drill a well. That's what we're looking for, is probably drill that as a first step and then as a second step, move to Dukas. We are looking at funding that through a farm-out. We've got a 30% interest in Mount Kitty. Santos has a 70% interest. Collectively, we are both looking to try and find a good farm-out partner to farm that out to and fund all, if not, a large portion of that drilling cost. The drilling costs have increased substantially since the joint venture began in 2012. And you got to remember, that joint venture started in 2012. Santos is the operator. They've been the operator, and it's very difficult for us to push anything or make anything happen unless they're onboard with it. We do have alignment in trying to find a farm-in partner. And one of the things that we are trying to do is see how we can reduce the cost of those wells because that is a major hurdle for parties coming in that want to put risk money in. But we want to find an efficient way to get that exploration done so that we have the best opportunity to get parties in to fund it. But it is not cheap. These are deeper wells. They've got solid components. Santos is not your lowest cost operator. And as you can imagine, it's one of the things we need to work through if we're going to be successful getting parties in to fund that well.

[indiscernible]

We're out actively looking now. Timing will be as soon as we can find a party and close the deal. And we've had, so to speak, fish on the hook. We've thought we were getting very close. That hasn't happened. There's been other interests. So we do see a lot of positive interest on it. But we just have not been able to close a transaction at this point. So we're still optimistic. We're out actively looking right now. We are talking to a number of parties and continue to try and get that deal across the line. I think there will be a point in time where if we aren't successful in this next round, there might be a discussion with the parties as to where do we go from here, who wants to stay in, who has operatorship. And certainly, we would love to have operatorship of that permit. We think we can drive it more efficiently, have more success in bringing in farm-in partners. So that is certainly one of the conversations we're having. But I don't see this extending out for many years. Santos is under pressure to use it or lose it. I think this falls into that basket. And I think we either find a farm-in partner to come in, in the nearer term or we have a rethink about how that permit moves forward, who has majority interest in it and who actually operates that field. And my hope is that Central can somehow navigate a way to be operator and be able to have our own destiny in terms of driving an outcome in a program because I think we can do it more efficiently and get a deal across the line. But right now, Santos are the majority owner of that permit and have operatorship. So it really has to go through them.

Santos is developing the Barossa field on Darwin under great duress [indiscernible] Are they planning to sell any gas into Australia? Or is it all going to be exported?

From that field?

Yes.

I'm not sure what their strategy is.

They're not obliged to supply under any agreement to Australian users?

I don't believe they are, not for...

It means they're going to drill another well. Didn't you say that?

Blacktip is. Blacktip is the one -- so the Blacktip field is the one that has historically, over the past sort of 5, 10 years, been supplying significantly -- they've been the dominant supplier into the NT, selling it to the NT government. That Blacktip offshore field is a domestic supply source. It has been for some time. That's the one that has cratered, and they're really struggling to get that production back up.

They can't make their contracts [ gas ]?

What's that?

Would they be not able to supply their contracts?

Yes. So certainly, the Northern Territory government through PwC has purchased that volume of gas on a very long-term basis. Obviously, that decline, I don't believe, was anticipated, and it would have left the NT government short on being able to supply their customers. You only have to look at the NGP. The NGP had a 10-year 30 TJ a day foundation contract to build that $1 billion pipeline. That pipeline is sitting empty today. And that's not how pipeliners tend to expect their utility investments to produce returns. Yes. So we'll see what happens. Blacktip is obviously going to try and increase. There's a lot of moving parts in it. And the thing I would say is that, over the next 3 to 6 months, the market will have some significant information coming forward. We'll be managing and working through that. But it will be seismic shifts for the NT market, and we're preparing ourselves now, just as we did in this last GSA, to take advantage of those market dynamics and capitalize on whatever opportunities we can find. Okay. I'll hand over to Mick. Thank you.

Thanks, Leon. And now let's turn to the business of this meeting. Ladies and gentlemen, the purpose of today's meeting is to deal with the formal business as set out in the Notice of Annual General Meeting dated 18 November 2024. As shareholders, you have all received the Notice of Meeting. If there are no objections and in an effort to expedite proceedings, I move that the Notice of Meeting be taken as read. The items of business on the agenda are set out in the Notice of Annual General Meeting. These are represented by consideration of the financial report for the year ended 30 June 2024 and 5 individual items and 1 contingent item, which may be put to the meeting for resolution or withdrawn. Minutes of the previous meeting of shareholders held on 14 November 2023 are available by request from the Company Secretary, Mr. White, at the conclusion of the meeting or by e-mailing [email protected]. Based on item 2, proxies and direct votes have been received from 153 shareholders representing 200,588,414 shares, which is 26.91% of the company's issued capital. All proxies and direct votes have been received by and validated by Computershare. As Chair of this meeting, I advise that I intend to vote all undirected proxies in favor of items 2 through 6 and if required, against item 7. As discussed earlier, we will conduct a poll on items through -- items 2 through 6 and if required, item 7. I appoint Mr. Brimelow of Computershare as the returning officer to conduct the poll and to report to me the results of that poll. Mr. Brimelow will have power to co-opt as his agents, members of his staff and other company representatives. Item 1, the financial statements and reports. The first item of business of the meeting is to receive and consider the annual financial report of the company for the financial year ended 30 June 2024 together with the directors' report and the auditor's report. I now table the annual financial report of the company for the financial year ended 30 June 2024 together with the directors' declaration, the directors' report and the auditor's report. And for the record tabled -- this is an opportunity to ask questions of the company auditors, PricewaterhouseCoopers, on the conduct of the audit. Marcus Goddard from PwC is available for responding to questions relating to the financial reports. With that, are there any questions on the financial statements? I'll take that as no. There's no questions online from Damian. There is no requirement for vote on the acceptance of these reports. And as such, we now move to the first resolution of the day. Item 2, adoption of the remuneration report. The Corporations Act requires all listed companies to present their remuneration report for each financial year for adoption by shareholders at the company's Annual General Meeting. The report can be found within the directors' report section of the annual report. This resolution of shareholders is advisory only and is not binding on the directors or the company. Members of the key management personnel and their proxies and closely related parties who receive remuneration under the remuneration report are restricted from voting on this resolution. The resolution for item 2 states that for the purposes of Section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the remuneration report as contained in the company's annual financial report for the financial year 30 June 2024. Is there any questions, discussion on the motion? Damian? I confirm that the company has received valid proxy votes and direct votes in relation to item 2, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you have not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Resolution 3 is the reelection of myself. As this resolution relates to myself, I'll ask Stephen Gardiner, Chair of the Audit and Risk Committee, to chair the meeting for this resolution.

Thank you, Mick, and good morning, ladies and gentlemen. The resolution from item 3 is as follows: that Mick McCormack, a director, retires by rotation in accordance with the constitution and the ASX listing rules and being eligible, offers himself for election as a director and is reelected as a director. Mick, I'd like you to say a few words to reintroduce yourself to our shareholders.

Thank you. Same speech. Thank you, Chairman, and good morning to all participating in today's AGM. I have served as an Independent Director of your Board since September 2020 and as Chair since 1 March 2021, and I'm very pleased to put myself forward for election today -- reelection. I currently serve as a member and indeed the Chair of the Board's Remuneration Committee. This committee plays an important part in ensuring Central's operations and processes are held to the highest standard to ensure the company delivers on its strategic priorities for you, the shareholders and for all our stakeholders. In addition to my responsibilities as a Central Director, I'm a Non-Executive Director of Origin Energy Limited and Whitehaven Coal Limited. I'm also Chair of the Australian Brandenburg Foundation, a director of the Clontarf Foundation and the Patron of the Australian Ice Hockey League. I have almost 4 decades of experience in the energy and infrastructure sectors where most significant -- where the most significant feature is my 20 years spent with APA Group, where I was the Founder of the company and was the CEO and Managing Director for 15 years. During my leadership of APA, its total assets grew from $1 billion to $24 billion, taking it to an ASX top 30 company and along the way, delivered returns to shareholders of 17% per year over time. Don't ask me what's happened to it since I left. At one time, I could lay claim that I had either built, owned or operated most of Australia's gas infrastructure. All up my nonexecutive career experience, together with my executive career mean I offer significant operational, strategic and governance experience as the company navigates its way through the challenges the future will no doubt throw up. In conclusion, I'm seeking your support for election today and very much hope to have the opportunity to continue to serve you as a member of your Board. Thank you.

Thanks very much, Mick. Are there any questions from the floor on this motion? No. Nothing online. Okay. Very good. Okay. I confirm that the company has received valid proxy votes and direct votes in relation to item 3, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you have not already done so. In-person voting on this resolution will be conducted at the end of the meeting -- of business at this meeting. I'll now hand back to Mick. Thank you.

Thanks, Stephen. There are 4 resolutions -- and I'm talking to item 4. There are 4 resolutions under this item of business, each dealing with the issue of share rights to nonexecutive directors. By way of explanation, similar to the annual process that we've undertaken since the 2021 AGM, this resolution seeks to approve the issue of share rights to nonexecutive directors who elect to sacrifice up to 25% of their 2025 financial year base fees, and that's inclusive of superannuation but excluding committee fees, in order to receive an equivalent value in the form of share rights issued under the company's employee rights plan. This in turn is to enable the nonexecutive directors to progressively share in the growth and sustained value of Central by acquiring a shareholding in the company with a value equal to their total annual base fee remuneration plus superannuation. Over the years, it has been somewhat problematic for those directors, like myself, who, whilst wanting to buy shares in the company, have been unable to do so because we are in possession of market-sensitive information. If any of the resolutions in items 4A to D are not carried, the company will not be able to proceed to issue the share rights in respect of the relevant nonexecutive director. And accordingly, the 2025 financial year base fee will be paid fully in cash. Are there any questions on the resolution to issue share rights to nonexecutive directors? That's a first. Item 4A, approval of the issue of share rights to myself. Again, as this resolution relates to myself, I will ask Stephen Gardiner to chair the meeting for this resolution. Thank you, Stephen.

Again, thank you, Mick. The resolution for item 4A is that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval will be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Mick McCormack or his nominees under the company's employee rights plan and otherwise on the terms and conditions set out in the explanatory statement. Any discussions in the room on this motion? No. Nothing online? Very good. Okay. I therefore can confirm that the company has received valid proxy votes and direct votes in relation to item 4A, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you have not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Thank you.

Thanks, Stephen. Item 4B, approval of the issue of share rights to Mr. Stephen Gardiner. The resolution for item 4B states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval will be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Stephen Gardiner or his nominees under the company's employee rights plan and otherwise on the terms and conditions set out in the explanatory statement. Is there any discussion, questions on this motion? Damian, nothing over there? I confirm that the company has received valid proxy votes and direct votes in relation to item 4B, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you have not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Item 4C, approval of the issue of share rights to Ms. Katherine Hirschfeld, AM. The resolution for item 4C states that for the purpose of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Kathy Hirschfeld or her nominations under the company's employee rights plan and otherwise on the terms and conditions set out in the explanatory statement. Is there any discussion, questions on this motion? Damian? No. Thank you. I confirm the company has received valid proxy votes and direct votes in relation to item 4C, and these are displayed on the screen. Would those online attendees now cast their votes to the resolution if you've not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Item 4D, approval of the issue of share rights to Dr. Agu Kantsler. The resolution for item 4D states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, approval be given for the grant of a number of share rights determined in accordance with the formula outlined in the explanatory statement to Agu Kantsler or his nominees under the company's employee rights plan and otherwise on the terms and conditions set out in the explanatory statement. Is there any discussion, questions on this motion? Thank you. I can confirm that the company has received valid proxy votes and direct votes in relation to item 4D, and these are displayed on the screen. Would those attendees now please cast their votes to the resolution if you've not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Item 5, issue of share rights to Managing Director under the financial year 2024 executive incentive plan. The resolution for item 5 states that for the purposes of ASX Listing Rule 10.14 and for all other purposes, the issue of up to 5,530,701 share rights to Leon Devaney or his nominee under the company's employee rights plan and otherwise on the terms and conditions set out in the explanatory statement is approved. Is there any question, discussion on this matter? Damian? Thank you. I confirm that the company has received valid proxy votes and direct votes in relation to item 5, and these are displayed on the screen. Would those online attendees now please cast their votes to the resolution if you have not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Item 6, issue of share rights to Managing Director under the FY '25 long-term incentive plan. The resolution for item 6 states that for the purpose of ASX Listing Rule 10.14 and for all other purposes, the issue of 8,125,000 share rights to Leon Devaney or his nominee under the company's employee rights plan and otherwise on the terms and conditions set out in the explanatory statement is approved. Is there any question, discussion on this motion? Thank you. I confirm that the company has received valid proxy votes and direct votes in relation to item 6, and these are displayed on the screen. Would those online attendees now cast the votes to the resolution if you have not already done so. In-person voting on this resolution will be conducted at the end of the business of this meeting. Item 7, contingent item, Spill Meeting. This resolution is a contingent item of business, which will apply if and only if at least 25% of the votes cast on the resolution in item 2 are against the adoption of the remuneration report. Accordingly, if at least 25% of the votes cast on the resolution in item 2 are against adopting the remuneration report, this will constitute a second strike and the resolution in item 7 will be put to the meeting and voted on as required by Section 250V of the Corporations Act. If less than 25% of the votes cast on the resolution in item 2 are against adopting the remuneration report, then there will be no second strike and the resolution in item 7 will be deemed to have been withdrawn and not put to the meeting with any votes not counting toward that resolution. The resolution for contingent item 7 states that as required by the Corporations Act 2001, the Commonwealth Act, one, an extraordinary general meeting of the company, a Spill Meeting will be held within 90 days of the passing of this resolution; two, all the directors in office at the time when the resolution to approve the directors' report for the financial year ended 30 June 2024 was passed, other than the Managing Director, that being myself, Stephen Gardiner, Kathy Hirschfeld and Agu Kantsler, who remain in office at the time of the Spill Meeting, cease to hold office immediately before the end of the Spill Meeting; and three, resolution to appoint persons to offices that will be vacated immediately before the end of the Spill Meeting be put to the vote at the Spill Meeting. Is there any discussion on the contingent motion? Nothing. I confirm that the company has received valid proxy votes and direct votes in relation to contingent item 7, and these are displayed on the screen. Would those online attendees now please cast their votes to the contingent resolution if you have not already done so. In-person voting on the contingent resolution will be conducted at the end of the business of this meeting. I'd like to advise that all voting on all resolutions will close shortly. I will now pause to allow shareholders and proxy holders to finalize their votes online and in person, so please complete your voting now. And would you please indicate by raising your hand if you require any assistance. [Voting]

Ladies and gentlemen, Mr. Brimelow has confirmed that all required voting papers have been collected and sufficient time has been permitted to allow online voting. So I now declare voting closed for the poll for items 2 through 6 and if required, item 7. Results of the voting will be notified to the ASX in accordance with the Corporations Act and the ASX listing rules later today, including if contingent item 7 was required or withdrawn. Ladies and gentlemen, that concludes today's formality. I'd like to thank you for your attendance and interest in your company and invite those here in the Christie Centre to join the Board and the company's senior executives for refreshments outside and an opportunity to ask questions. I'd also like to thank those online who have -- and they are encouraged to ask any further questions they may have via the company's website or by e-mailing [email protected]. With that, thank you, and have a very good day.