Central Petroleum Limited announced that it has entered into a Memorandum of Understanding (MOU) with its Mereenie co-venturers and Twin Bridges LLC (Twin Bridges), to progress a helium recovery unit (HRU) at its Mereenie field in the Northern Territory towards a final investment decision (FID). The proposed HRU project will target production of up to 60,000 scf of compressed helium gas per day, separating helium from the existing natural gas produced at Mereenie. Key Points: Central and its co-venturers at Mereenie will work with experienced US-based helium developer and producer, Twin Bridges, to progress the HRU project at Mereenie toward FID.

(Central is operator of the Mereenie JV and holds a 25% interest via a subsidiary. Co-venturers include Macquarie Mereenie Pty Ltd. (50%), NZOG Mereenie Pty Ltd. (17.5%) and Cue Mereenie Pty Ltd. (7.5%)) The proposed HRU project will: Extract helium from the existing Mereenie gas stream using proven membrane technology. Target production of up to 60,000 scf/d of compressed helium gas.

Preliminary technical studies and helium offtake negotiations have been completed indicating solid project economics, leveraging on the existing gas stream and infrastructure at Mereenie. Under the terms of the non-binding MOU: Twin Bridges will design, build, fund and own the HRU, accelerating commencement of helium production and increasing project value through access to their proven helium processing and marketing expertise. Operating profit from the HRU project will be shared 50/50 between Twin Bridges and the Mereenie JV.

Indicative term contract pricing for helium gas is currently very strong, with the impending closure of the Darwin LNG plant making the proposed Mereenie HRU Australia's sole source of domestically-produced helium. Successful production of helium at Mereenie will also demonstrate the potential of the Amadeus Basin as a world-class helium resource, where Central has a material position in several large sub-salt prospects where relatively-high helium content has previously been measured. The MOU with Twin Bridges has a term of 12 months, with the parties working together to achieve the necessary design, engineering, commercial and financial milestones required to reach FID for the construction of the HRU at Mereenie.

The MOU provides for up to an additional 12 months exclusivity for Twin Bridges, who will draw on their expertise in building similar plants in North America. If the project proceeds, Twin Bridges will design, build, fund and own the HRU plant which will be integrated with the existing Mereenie gas processing facility operated by Central. Twin Bridges will market the produced helium with offtake arrangements already well advanced.

Preliminary financial modelling indicates solid project economics leveraging on the brownfield economics afforded by the existing gas stream and infrastructure at Mereenie and strong helium markets. It is proposed that the HRU will be sized to process up to 30 TJ/d of Mereenie gas, which typically contains over 0.2% helium, extracting up to 60,000 scfd of helium gas using proven membrane technology. The compressed helium gas is anticipated to be sold ex-field to a major helium aggregator and distributor in Australia.

The Mereenie JV will share the operating profits from the HRU project on a 50/50 basis with Twin Bridges. The only domestic production of helium in Australia is expected to cease when the Darwin LNG plant closes later this year. The proposed Mereenie HRU project would then be the sole source of domestically-produced helium, helping to satisfy Australia's strategic need for helium which is used in many critical health and technology applications.

Additionally, successful production of helium at Mereenie will also demonstrate the potential of the Amadeus Basin as a world-class helium resource, where Central has a material position in several sub-salt prospects. Helium concentrations of 6% have been recorded at the Magee-1 well and 9% at Mt Kitty. Central is seeking to drill several sub-salt appraisal/exploration wells in the Southern Amadeus to further test these prospects along with the promising Dukas lead.

Seismic data will also be acquired at the Zevon lead to the north-west of the Mereenie field later this year to identify the location for a possible exploration well.