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Armour Energy wins contract to supply gas from Kincora Project

Armour Energy (ASX:AJQ) has executed gas sales agreements with Australia Pacific LNG for the supply of gas from Armour’s Kincora Project over a minimum five year period.
Armour Energy wins contract to supply gas from Kincora Project
Armour Energy wins contract to supply gas from Kincora Project

Australia Pacific LNG is a strong counterparty gas buyer, being a joint venture between three leading oil and gas companies (Origin Energy, ConocoPhillips, and Sinopec).

The first gas production and commencement of gas sales from the Kincora Project, situated on the Roma Shelf in Queensland, is targeted to be achieved by June 2017.

Armour’s Phase 1 at Kincora will be the restart of gas production, commissioning and then increasing production rate to 9 terajoules per day.

The production will initially be from the Newstead storage facility, followed by various wells across the field that were previously in operation.

The Newstead storage facility currently holds about 2.3 petajoules of treated gas (sales quality) which is expected to require minimal re-processing.

The agreement with Australia Pacific LNG provides Armour with cash flow certainty for 1.8 petajoules per annum over the first five years.

Armour has retained the right to supply the broader gas market, including industrial customers, traders and other LNG producers, after commitments to Australia Pacific LNG have been met.

Phase 2 at Kincora will involve the drilling of new wells plus workovers and stimulations of existing wells to achieve an increase in gas production to 20 terajoules per day over a period of 12 to 18 months from first gas production.

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