Vintage Energy aims to 'make a difference' in east coast gas supply
A crisis for some is an opportunity for others.
Certainly for emerging explorer Vintage Energy, the gas supply squeeze on the east coast means it can plan a future development path that is not dependent on easy-to-market oil discoveries to bankroll the rest of the operations.
"The dynamics for small companies have changed," says Vintage managing director Neil Gibbins, the former chief operating officer at Beach Energy who has reunited with his former boss at Beach, Reg Nelson, who is chairing the newcomer.
"In the early days of Beach, the thing to do was to find some oil and make money reasonably quickly. Now smaller companies can still do that but they also have the opportunity to go out and find some gas and get it to market.
"Small companies can come in here now and make a difference."
Vintage shares will list on the Australian Securities Exchange on Monday after raising $30 million in an initial public offer of stock sold at 20¢ apiece. Almost 65 per cent of the offer, managed by RBC Capital Markets and Taylor Collison, was taken up by institutional investors, familiar with the east coast gas market issues and the track record of the leadership team when at Beach.
Most of the proceeds are earmarked for drilling and other work at Vintage's two priority projects, in Queensland's inland Galilee Basin, where it is working with fellow junior Comet Ridge, and in the onshore Otway Basin in South Australia.
Depending on results, production could follow in "a couple of years", Mr Gibbins said, pointing to expectations of ongoing demand for gas for power generation in the eastern and southern states, even if industrial demand suffers as a result of elevated prices.
Scouring for new ventures
Another venture in onshore Victoria is stalled but Mr Gibbins is hopeful of a lifting of the moratorium on conventional gas in mid-2020, while a venture in the Bonaparte Basin in the Northern Territory is prospective for both gas and oil.
A technical team with a track record of screening farm-ins and acquisitions is also scouring for new ventures.
"We're not going to sit still," Mr Gibbins said. "We're looking at other opportunities to grow the company, still with a focus on east coast gas but if oil opportunities present themselves at a reasonable price we'll certainly be interested in looking at them."
He expects pricing for gas to remain supportive, even under a future Labor government with its threat of price controls under the gas plan announced earlier this month.
"Government policy is extremely confusing to say the least, that's a polite way of putting it," Mr Gibbins said
"Policy settings have got to change. I think the days of $4 [a gigajoule] and $6 gas are gone: that's just the reality."
Gas contracts are currently in the range of about $8.50-$11 a gigajoule according to regulators.
Supply is the critical factor, Mr Gibbins said.
"They've got to put policy settings in place that encourage companies to go out and look for gas and change that supply-demand situation. Intervention doesn't help you in that sense," he said.
"I think there are assets around the place that are available, or acreage that is available, that perhaps Vintage can get hold of and make a difference in terms of gas supply."
Thursday, September 20, 2018
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