It's not quite the same as hedging, it's just selling a...

It's not quite the same as hedging, it's just selling a long-term contract at a fixed price agreed between the buyer and seller. It's not like hedging where prices are hedged through a third party, and it applies to the entirety of the sales volume.

1) This is actually quite a complicated question. Maximum production capacity is not constant, and it depends on both gas plant capacity and field capacity (what the wells in the field can actually deliver). Field capacity will naturally decline over time as the reservoir is depleted and requires investment in the form of new production wells to (temporarily) reverse it. Neither Mereenie or Palm Valley are capable of filling their facilities capacity at the moment, I think Mereenie's capacity is 55 TJ/d and according to last week's quarterly report, it's only capable of 32 TJ/d (of which CTP only has 50%) and declining quite quickly. For comparison, 2 years ago it was capable of 50 TJ/d so that's a pretty significant decline. But they are planning a development campaign of 2 new wells and 4 recompletions, which (assuming they are successful) should increase capacity up to 45 TJ/d (22.5 TJ/d net CTP), which is the level they are targeting for a long-term average, ie they will drill new wells or recompletions periodically to keep the field able to produce at around that number.

Palm Valley IIRC has a plant capacity of 15 TJ/d but can only make 9 TJ/d currently. Again there are more wells planned here but they are riskier. It would only take one success to fill it up to 15 TJ/d again though.

Dingo has a plant capacity of 5 TJ/d and seems to be still capable of delivering that.

Add those together and CTP is currently able to produce about 30 TJ/d net, and if the Mereenie program achieves its target that will rise to about 37 TJ/d, which is 2.7 and 3.3 PJ per quarter, respectively. Their firm sales for CY21 are 2.5 PJ per quarter so there isn't much spare capacity there this year, but if you look at the chart in the quarterly you will see the firm sales number is dropping off pretty sharply out to CY25. Assuming the Mereenie upgrade is successful and the PV-13 well continues to plateau they should have increasing amounts of gas uncontracted out to CY25 which will be available for new sales contracts.

Complicating this is that CTP has pre-sold some gas so that still needs to be delivered on top of the sales contracts, which means less gas available to fill any new opportunities.

So to answer the question "Would CTP be able to increase production on short notice to meet additional demand?" - yes, as long as they are willing to keep investing in the Mereenie field to keep it their target 45 TJ/d capacity.

2) The contracts are at a fixed, agreed price, not today's spot price. The spot market is very small in eastern Australia, the vast majority of gas is sold on long term contracts, so the contract price is more important than the Wallumbilla hub spot price. But if there is a gas shortage in eastern Australia the contract gas price will rise too, and most of these contracts are for fairly short terms, usually around 3-5 years. So they will roll over and be replaced by new contracts. If there's a gas shortage, those new contracts will be at a higher price.