ARC enters major gas sales contract with Alcoa

ARC Energy has entered into a major gas sales agreement with Alcoa Australi....

  ARC Energy has entered into a major gas sales agreement with Alcoa Australia for the delivery of up to 500 petajoules of gas from future discoveries on ARC’s interests in the onshore Canning Basin.The gas sales agreement includes a gas prepayment by Alcoa to ARC of A$40m in September 2007, which will be used to accelerate ARC’s regional Canning Basin exploration program. The transaction provides ARC with the customer support to rapidly commercialise gas discoveries, while providing Alcoa with a diversified long-term gas supply option. The agreement enables the acceleration of ARC’s Canning Basin exploration program, allowing the company to retain all liquids and oil discovered in the exploration program and retain operatorship and full equity in its permits.ARC’s Canning Basin exploration program is due to commence in August 2007 when Century Rig 18 will be transported to the Canning Basin from the Perth Basin. According to ARC, the Canning Basin exploration program is currently scheduled to run for three years and to drill up to 20 exploration wells. As part of the gas sales agreement, at least four of the exploration wells will target gas prospects with potential reserves sufficient to supply Alcoa. The gas sales agreement establishes a powerful commercial alliance between Alcoa, Western Australia’s largest domestic gas consumer and one of Australia’s leading industrial and resource companies, and ARC, Western Australia’s largest onshore oil and gas producer and most active onshore explorer. ARC Managing Director, Eric Streitberg said the company was delighted to have entered into this agreement. “Not only does the gas sales agreement make the development of Canning Basin gas discoveries and the building of the GNP “bankable”, but the A$40m prepayment gives ARC the confidence to accelerate its exploration program,” Mr Streitberg said. “We are particularly pleased to be partnering with Alcoa,” he said. “Alcoa has the financial credibility, the contract flexibility and the long-term gas requirements to be the partner of choice in ARC’s anticipated major gas development in the Canning Basin.”