Metgasco leaves town to explore elsewhere
EMBATTLED gas miner Metgasco announced yesterday in its Quarterly Activities Report, it will be decommissioning its two remaining wells, and leaving the Northern Rivers within the next two months.
However, the miner stated it would be reviewing new business opportunities in the oil and gas sector and has set itself the task of identifying opportunities and securing them within the first six months of 2016.
Metgasco's licences have now been cancelled, so too has court action against the NSW Government. The $25 million settlement has been paid by Government.
Metgasco stated it would initiate a series of cost cuts, starting with a reduction in director's fees and Managing Director remuneration and outsourcing of the CFO and Company Secretary roles.
Managing Director, Peter Henderson, has agreed to different remuneration terms while the miner seeks new business.
Effective January 1, Mr Henderson agreed that his remuneration will become more performance based with his salary (including superannuation) cut to $325,000 per annum, with an end 2016 bonus which will be subject to Metgasco's share price performance.
The company stated: "With Brent oil prices currently at a 12 year low, below US$30/Bbl, the Company is confident that it can secure attractive business opportunities within the first half of the year."
Changes to the Board were made, with Len Gill announcing his retirement as Chairman, effective 16 December 2015 and his intention to retire as a non-executive director towards the end of February 2016.
Mr Greg Short assumed the role of Chairman. Mr Philip Amery joined the Board effective 23 December, bringing capital markets and finance skills and experience to the Board.
As part of the settlement / buy-back agreement with Government, Metgasco must decommission the two remaining CSG wells in its previous licences and rehabilitate the sites, at which stage the remaining $236k held in bonds by the NSW Government will be released.
The decommissioning and rehabilitation process will commence in January 2016 and be completed in the first quarter of 2016.
In parallel, Metgasco is winding up its Northern Rivers operation, shutting down its Casino shop-front and workshop and selling remaining equipment and the land it purchased for the Richmond Valley Power Station.
The sale of the land and equipment plus return of the Government bond is expected to exceed the cost of the decommissioning / wind down operation.
The buy back
At the 16 December General Meeting, more than 50% of the shares voted supported the Board's $25 million settlement / buy-back offer.
Action was taken immediately to cancel the licences, withdraw the PEL 426 renewal application and production lease application and to terminate court action against Government.
In turn, NSW Government transferred $25 million and released $430,000 held by the Government in bonds to Metgasco, as per the ASX announcement of 22 December 2015.