Sunday, 1 March 2015

ERM Power would like to bail out of coal seam gas miner Metgasco Limited ?

Metgasco Limited's largest shareholder appears to be losing interest in the fate of this coal seam/tight gas explorer and wannabe production company.

Unfortunately with the ordinary share price being firmly in the 2 cents range, ERM Power will have to wait before any move to sell off its interest in this company.

Argus Media

ERM Power mulls future of NSW gas assets
22 Feb 2015, 11.48 pm GMT
Sydney, 22 February (Argus) — Australian power and gas group ERM Power is still considering the future of its gas interests in New South Wales (NSW), which include an interest in independent coal-bed methane (CBM) gas developer Metgasco and some exploration areas.
ERM bought a 13pc stake in Metgasco in 2013, but the CBM exploration group has been hampered by a NSW government ruling halting further exploration at the company's Casino project because of community concerns and there has been no resolution to the issue.
"These assets are being impacted by regulatory uncertainty in NSW which, at this point, seems far from being resolved. We will continue to keep these assets on minimum expenditure until investment conditions materially improve," ERM said.
The company also operates its 100pc owned 332MW Oakey peak demand gas-fired plant in Queensland, which was only used 3pc of the time during July-December last year. Oakey reported a 3.8pc fall in its asset value from a year earlier to A$223mn ($174mn) in the six-month period. There were increased opportunities for Oakey because of higher volatility in electricity prices in Queensland during the 2014-15 summer, ERM said, with electricity spot market prices reaching the maximum price cap of A$13,000/MWh on numerous occasions.

On 24 February 2015 Metgasco Limited released its Financial Report For Half Year Ended 31 December 2014.

In the last six months of 2014 it recorded a loss of $2,105,164 with $955,547 of this figure listed as professional fees.

Presumably these fees are associated with its court case Metgasco Ltd v Minister for Resources & Energy which has been waiting judgment since the end of October 2014.

Since announcing its script merger with Elk Petroleum on 22 December involving a convertible loan facility for Elk of $2.5 million, Metgasco has lent Elk a further $1.4 million this year.

Metgasco's ailing fortunes will not have been helped by the fact that one of the main planks in its argument for the establishment of Northern Rivers gasfields - ie. that these gasfields would bring down the cost of gas for business and residential users - has been contradicted by the Select Committee on the Supply and Cost of Gas and Liquid Fuels in New South Wales (25 February 2015) report which states gas prices; will rise regardless of whether there is an indigenous supply...Eastern Australia is becoming part of a single global market for commodity gas, and wholesale prices are being increasingly set by international prices. In the future, it is likely that NSW gas retailers will have to compete with offshore demand and pay export parity prices for wholesale gas.

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