- Amplitude Energy and O.G. Energy enter binding joint venture arrangements to progress the East Coast Supply Project (ECSP) on a 50/50 basis to deliver additional gas supply to the structurally short East Coast market
- The Boards of Amplitude Energy and O.G. Energy have approved the ECSP three-well drilling program
- ECSP is targeting supply of up to 90 TJ/day through the existing Athena Gas Plant from 2028, subject to regulatory approvals, final investment decisions and successful execution, equivalent to the demand of >600,000 Victorian homes, and assisting with potential gas supply shortfalls as highlighted by AEMO
- O.G. Energy to fund its 50% share of point-forward ECSP costs with immediate effect and reimburse Amplitude Energy 50% of historic project costs, equating to approximately A$25 million(1)
- Alignment of Amplitude Energy’s offshore Otway Basin interests with O.G. Energy, including ownership of the VIC/P44 title containing the Annie discovery and VIC/P76 title containing the Nestor prospect
- ECSP Phase 1 cost estimate of A$240 – 270 million and Phase 2 preliminary cost indication of A$140 – 185 million, both net to AEL’s 50% share on a point-forward basis, comfortably funded from existing cash, organic underlying free cashflow generation and the company’s bank debt facility(2)
- Webcast to provide further details regarding the ECSP to be held at 10.30am AEDT on 24 March 2025
Amplitude Energy (formerly known as Cooper Energy) has entered into a binding interim joint venture agreement ('IJVA') with subsidiaries of O.G. Energy regarding the development of the East Coast Supply Project ('ECSP'), on a 50/50 basis, enabling the delivery of Amplitude Energy’s preferred three-well program to bring up to 90 TJ/d of gas supply through the existing Athena Gas Plant.
First gas supplied from the ECSP is targeted in 2028, utilising existing brownfield infrastructure, helping mitigate expected shortfalls in the market while supporting energy security for Australian customers.
Contemporaneously, subsidiaries of O.G. Energy and Mitsui E&P Australia ('MEPAU') have executed a sale and purchase agreement for O.G. Energy’s acquisition of MEPAU’s existing interests in the Otway Basin joint ventures, including the Athena Gas Plant ('Otway Sale Transaction'). Amplitude Energy understands the Otway Sale Transaction is subject to regulatory and other customary approvals(3) .
The IJVA establishes an unincorporated joint venture between subsidiaries of Amplitude Energy and O.G. Energy to progress the ECSP in the interim period between the signing of the IJVA and completion of the Otway Sale Transaction.
The IJVA contains agreed terms of O.G. Energy’s participation in the ECSP, including that it will participate in 50% of point-forward project costs from the date of signing, and reimburse Amplitude Energy for 50% of all historical ECSP project costs spent(1) . The reimbursement is structured in the form of a cost carry on ECSP expenditure, commencing from the date of completion of the Otway Sale Transaction. As at 31 January 2025, the reimbursement amounts to approximately A$25 million(4).
Separate agreements between Amplitude Energy and the O.G. Energy’s relevant subsidiaries have also been executed to align each party’s interests in the VIC/P44 title (containing the Annie gas discovery) and VIC/P76 title (containing the Nestor exploration prospect), at 50% each.
Additionally, Amplitude Energy, MEPAU and the O.G. Energy subsidiaries have entered into a tripartite agreement regarding administrative matters as they relate to the Otway Sale Transaction and the IJVA.
The IJVA, VIC/P44 and VIC/P76 transactions are subject to customary conditions. Further details of the agreements entered into, and the assets in question, are outlined at the conclusion of this announcement.
Managing Director and CEO Jane Norman commented that:
'These agreements establish alignment between Amplitude Energy and O.G. Energy and provide a clear path forward to progress our preferred three-well East Coast Supply Project, one of the largest new domestic conventional gas supply sources in the southeast market. Securing a strong, strategically-aligned partner for our project is a crucial milestone in ensuring additional gas supply to the East Coast gas market.
'In its latest Gas Statement of Opportunities released last week, AEMO highlighted the risk of peak-day gas shortfalls and seasonal supply gaps in the southern states arising from 2028, with annual supply gaps emerging from 2029. On success, our investment in the ECSP could potentially provide enough gas for >600,000 Victorian homes for a decade from reserves and conversion of our resources. The project is structured to deliver first gas as early as possible, minimise exploration risks and maximise the use of existing gas infrastructure.
'O.G. Energy is a significant international investor in conventional offshore gas and oil with existing interests in Australia, New Zealand, and the United States, and their investment in our Otway Basin assets provides strong validation for the ECSP, and the market opportunity more generally.
'We are pleased to have aligned our working interests across all our titles in the Otway basin, supporting future developments with an aligned partnership. We look forward to working with O.G. Energy to bring additional and much-needed gas supply to Australia’s southeastern domestic market.'
ECSP progress update
The respective boards of Amplitude Energy and O.G. Energy have approved the three-well ECSP drilling programme and determined that the Elanora well, with sidetrack to Isabella, will be the first to be drilled in the upcoming campaign. Amplitude Energy intends to exercise its options for the second and third well drilling slots within the Transocean Equinox rig consortium.
The ECSP is targeting 358 Bcf(5) of gross mean unrisked prospective resource potential in the Elanora, Isabella and Juliet prospects and 65 PJ gross 2C Resources in Annie. Based on the assessed geological probability of success of the fields, there is a 98% probability of gas discovery in at least one of Elanora, Isabella or Juliet.
The ECSP is targeting to backfill the Athena Gas Plant with up to 90 TJ/day gross of gas supply. First gas is targeted currently for 2028, subject to regulatory approvals, successful drilling outcomes, and final investment decision.
The Transocean Equinox drilling rig is expected to commence drilling the first firm well of its campaign for the joint venture in late calendar year 2025. Subject to exploration success, the parties intend to proceed to a final investment decision to undertake the development phase of the project.
Amplitude Energy is in discussions with potential gas customers regarding foundation contracts for the ECSP.
- Payment of back costs, subject to completion of the Otway Sale Transaction, is in the form of a carry from completion
- Indicative only, not guidance. Subject to customary project and corporate risks; please see Risks Management section (pages 60-63) of Amplitude Energy’s FY24 Annual Report
- No assurances can yet be given as to timing of completion, or whether approvals will ultimately be granted. In the event that the Otway Sale Transaction does not complete, the IJVA provides for the parties to seek O.G. Energy’s 50% participation in the ECSP under alternative ownership structures.
- Based on costs to the end of January 2025. Total historic project costs to be reimbursed will include all costs incurred to the date of signing the IJVA.
- The Low (P90), Mid (P50), Mean and High (P10) prospective resource estimates, and net share of each prospect, were announced to ASX on 9 February 2022. The estimated quantities of petroleum that potentially may be recovered by the application of future development projects relate to undiscovered accumulations. These estimates have both a risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially recoverable hydrocarbons.
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Source: Amplitude Energy
