Central Petroleum and its Palm Valley joint venture (JV) partners Cue Energy Resources and Echelon Resources have signed a binding multi-year gas sales agreement (GSA) with the Northern Territory (NT) Government in Australia.
The contract is set to supply up to 21 petajoules (PJ) of gas from the onshore Palm Valley gas field in the NT’s Amadeus Basin.
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The deal covers deliveries from the second half of 2026 (H2 2026) through to the end of 2034. It carries a fixed market price, consumer price index escalation and take-or-pay terms.
Central Petroleum is the operator of the Palm Valley JV with a 50% stake, while Echelon Resources holds 35% and Cue Energy Resources the remaining 15%.
The partners have made a final investment decision to drill two new wells at the gas field.
Drilling is scheduled to start in mid-2026, with production ramping up gradually during the later months of that year.
Civil works are mainly complete, long lead items have been ordered, regulatory approvals are in place or progressing, and the Ensign 974 drilling rig has been contracted.
Central Petroleum expects its drilling and completion cost share to be around A$26m ($18.3m), which includes an allowance for possible diesel price increases.
The two new wells are expected to initially increase Central Petroleum’s gas production capacity by approximately 40% if targeted production rates are achieved. The planned wells will target the same geological formation as the PV-12 well, which was drilled in 2022.
Once operational, these wells are expected to help restore the Palm Valley production facility’s capacity to 15 terajoules (TJ) per day.
Gas produced in Palm Valley is brought at low pressure from the wells via flow-lines to a production facility, where it is compressed and dehydrated. From there, it enters transmission pipelines bound for customers in the NT and on the east coast.
The agreement replaces the arrangements outlined in a previously announced letter of intent with the Power and Water Corporation. That letter also included gas from the Mereenie Gas Field, which the current agreement does not cover.
Central Petroleum will market Mereenie gas to other buyers looking for long-term supply.
Central Petroleum CEO and managing director Leon Devaney said: “It has taken time to get the settings right, but we now have a significant GSA for the Palm Valley JV. Importantly, it underwrites an investment in two Palm Valley appraisal wells on an accelerated basis.
“The new wells will replicate the extended lateral designs that were successful in the last Palm Valley drilling programme.
“If the two wells are successfully delivered as planned, sales under the GSA will generate strong returns and increase free cash flows from later this year. Combined with our exploration activity in both the Cooper Basin (targeting oil and gas) and the Otway Basin (targeting gas), also planned in FY2027 [fiscal year 2027], we are positioned with several exciting near-term growth opportunities.”
Gas at Palm Valley was first discovered in 1965 in fracture systems between 1,800m and 2,200m deep in the Lower Stairway Sandstone, Horn Valley Siltstone and Pacoota Sandstones. The field’s anticlinal structure measures roughly 29km × 14km.
Earlier development saw production from the PV13 and PV12 horizontal wells, brought online in May 2019 and November 2022, respectively. The gross field capacity in December 2025 was around 6.4TJ per day.
