Sept. 12, 2013 /PRNewswire/ -- Magellan Petroleum Corporation ("Magellan" or the "Company") (NASDAQ: MPET) today announced that on
September 12, 2013, the Company through its indirect subsidiary, Magellan Petroleum Corporation (NT) Pty Ltd ("MPNT"), signed a gas supply and purchase agreement (the "Dingo GSPA") with Northern Territory Power and Water Corporation ("PWC") for the long-term sale of gas from the Company's Dingo gas field. Pursuant to the Dingo GSPA, the Company has contracted to supply up to 31 PJ (30 Bcf) of gas to PWC on a 100% take-or-pay basis over a 20‑year supply period. The Company's supply obligation is expected to begin in early calendar year 2015 at a fixed price escalating with Australian CPI. The Dingo GSPA has been approved by the boards of directors of both PWC and Magellan. The Dingo GSPA is subject to certain customary conditions, including the Company successfully obtaining all regulatory approvals and constructing facilities necessary for commissioning the Dingo field for commercial gas production.
With this long term contract now in place, the Company will use the time before the commencement of gas supply to design, construct, and commission the surface facilities and tie-in pipeline necessary for the production and delivery of Dingo's gas. Currently, the Company is undertaking the front-end engineering and design ("FEED"), which is a continuation of work performed during the pre-FEED stage in fiscal year 2013, and which is expected to take approximately six months to complete. Gas volumes are expected to be produced from three wells drilled at Dingo in the 1980s and 1990s, two of which have since been temporarily shut-in, and which are expected to be capable of producing gas volumes sufficient to meet the delivery requirements under the Dingo GSPA. Concurrently with the FEED work, the Company will be applying for various regulatory approvals necessary for constructing the Dingo facilities and pipeline and commissioning Dingo for commercial gas production. The Company expects to receive all approvals by the summer of 2014 and intends to begin construction of the pipeline and facilities immediately thereafter.
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