Highlights

  • Equus Energy (ASX:EQU) and Alcoa have executed a binding conditional 10-year Gas Sales Agreement for approximately 50 TJ/day.
  • The agreement represents approximately 182 PJ of contracted gas Supply over its 10-year term and establishes Alcoa as Equus' foundation domestic customer.
  • The agreement forms part of a broader funding arrangement providing Equus with access to up to US$30 million for project development activities.
  • Equus has completed the technical phase of Pre-FEED and is progressing partnering, commercialisation and approvals ahead of FEED and a potential Final Investment Decision.

Equus Energy (ASX:EQU) has reached a significant commercial milestone for its Equus Gas Project in Western Australia after executing a binding conditional Gas Sales Agreement with Alcoa of Australia. The agreement provides for approximately 50 terajoules per day of gas over a 10-year period following project start-up, equivalent to about 182 petajoules across the contract term.

Alcoa Becomes Foundation Domestic Gas Customer

The agreement establishes Alcoa as the foundation domestic gas customer for the Equus Gas Project. Alcoa is described by Equus as Western Australia's largest domestic gas user and a major integrated aluminium producer, providing a substantial industrial Demand base for the proposed supply.

The contracted Volume of approximately 50 TJ/day represents around 5% of the Western Australian domestic gas market, according to the company. The arrangement also addresses the project's domestic gas supply commitment under Western Australia's Domestic Gas Reservation Policy.

The GSA is conditional and forms part of a wider Gas Sales and Funding Agreement between the two companies. Under that arrangement, Equus has access to up to US$30 million of project funding to support work through Pre-FEED, FEED and toward a Final Investment Decision.

Equus Completes Technical Pre-FEED Phase

The latest agreement follows completion of the technical phase of Pre-FEED for the Equus Gas Project. Equus said this work confirmed the technical feasibility of a tie-back development designed to utilise existing North West Shelf infrastructure and available LNG processing capacity.

The proposed development structure is intended to provide access to both Western Australia's domestic gas market and Asian LNG export markets. By using existing infrastructure and spare processing capacity, the project is being progressed with an emphasis on reducing development requirements and supporting the pathway toward production.

Equus holds 100% ownership of what it describes as an independent, multi-trillion-cubic-foot gas resource on the North West Shelf. The company is now moving from the technical Pre-FEED stage toward project partnering and broader commercialisation activities.

Funding Supports FEED and FID Pathway

The funding component of the agreement provides Equus with an important source of Capital for the next stages of project development. Up to US$30 million is available under the broader arrangement with Alcoa, with the funding directed toward Pre-FEED, FEED and activities leading to a potential Final Investment Decision.

With the technical phase of Pre-FEED completed, the company has commenced partnering and commercialisation activities. The next development phase will involve advancing engineering work, project approvals and commercial arrangements as Equus progresses toward FEED and FID.

The company has also highlighted the potential role of the project in supplying Western Australia's domestic market while retaining access to LNG export opportunities through the North West Shelf infrastructure.

Western Australian Gas Supply Context

The proposed project is being advanced against a backdrop of continued demand for reliable long-term gas supply from major industrial users in Western Australia. Equus has positioned the development as a potential additional source of domestic gas while also providing flexibility through access to existing LNG infrastructure.

The agreement with Alcoa provides an identified domestic customer for part of the project's proposed output. At the same time, Equus continues to pursue additional project partnerships and commercial arrangements as development planning progresses.

Conclusion

Equus Energy's binding conditional Gas Sales Agreement with Alcoa establishes a 10-year framework for approximately 50 TJ/day of domestic gas supply and provides the Equus Gas Project with a foundation customer. Combined with access to up to US$30 million under the related funding arrangement and completion of the technical Pre-FEED phase, the agreement moves the project into its next development stage. Equus is now focused on FEED preparation, project partnering, approvals and commercialisation as it works toward a potential Final Investment Decision.