Central Petroleum has entered into binding Sale & Purchase Agreements to acquire strategic exploration interests from ADZ Energy, marking a significant expansion into the onshore Otway and Cooper basins. The transaction is central to the company's shift from a single-basin producer to a multi-basin exploration and production entity with direct access to the east coast gas market.

Acquisition Details and Financial Terms

The acquisition involves a 20% interest in the Otway basin's PEP169 exploration permit and a 49% interest in 24 South Australian Retention Leases and the PEL677 permit in the Cooper basin. The total financial commitment includes an upfront payment of A$9.2 million upon completion, plus the participating interest share of specified back-costs. An additional A$3.9 million is contingent on the commercial success of the Enterprise North well in the Otway basin. The deal also stipulates a 5% royalty payment to ADZ on future production from Central's 49% Cooper basin interest, with ADZ remaining as the operator of all permits.

Exploration Drilling Program

A near-term drilling campaign of three to four wells is planned between 2026 and early 2027. The Enterprise North exploration well in the Otway basin is scheduled for mid to late 2026. In the Cooper basin, two to three exploration wells are planned for late 2026 or early 2027. These wells represent high-impact exploration targets alongside the company's planned production drilling in its existing Mereenie and Palm Valley assets.

Strategic Rationale and Value Proposition

The acquisition provides significant growth opportunities. For the Enterprise North well, the upfront acquisition cost is estimated at A$1 per gigajoule, with success potentially doubling the company's equity gas production rates and allowing a quick conversion to a production well due to proximity to existing pipelines and processing facilities. In the Cooper basin, the acquisition cost is projected at less than A$1 per barrel of oil equivalent for three priority targets, with existing infrastructure enabling rapid commercialization of any discoveries.

Conditions and Context

Completion of the transaction, expected by 16 January 2025, is conditional on consent from Central's financier and ADZ obtaining certain security releases. This deal is part of a broader 18-month plan that includes drilling four production wells in the Mereenie and Palm Valley fields and participating in up to five high-impact exploration wells across its expanded portfolio.