Magellan optimistic on Amadeus gas operations

Palm Valley and Dingo gas fields in central Australia’s Amadeus basin are well positioned to provide stable and long-term cash flows in the relatively near term, said operator Magellan Petroleum Corp., Denver.

Palm Valley’s entire output is under contract, and a ramp-up in customer offtake is expected within 8-12 months, the company said. This ramp-up will boost gas sales to capacity of 1.4 bcf/year.

At Dingo south of Alice Springs, idle since the 1980s, the company expects to sign a gas supply agreement soon.

“Once we have a firm customer, we can complete the engineering and construction of the Dingo pipeline and related facilities and be in a position to sell gas at or near full capacity in approximately 18 months,” Magellan said.

Palm Valley and Dingo combined, when fully contracted, can provide the company with as much as $10 million/year of cash flow and in excess of $200 million in cumulative undiscounted net cash flow over the life of the assets. Magellan holds 100% interest in both fields.

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