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.

km/rjd

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.

The shady side of coal seam industry investment in Australia 2013

"He that lieth down with dogs shall rise up with fleas"

Attributed: Poor Richard’s Almanack

The Sydney Morning Herald 9 August 2013:

US banking giant JPMorgan Chase is facing parallel civil and criminal investigations over its sale of mortgage-backed securities before the financial crisis.

In a securities filing on Thursday, JPMorgan said it was notified in May by the civil division of the US Attorney’s Office for the Eastern District of California that it had preliminarily concluded that the bank ‘‘violated certain federal securities laws’’ in connection with the subprime mortgage-backed securities offered over 2005-2007.

The filing described a federal criminal inquiry in parallel to the civil investigation, but did not provide further details…

The company last week agreed to pay $US410 million to resolve US charges that it manipulated power prices in California and the Midwest…

Bloomberg.com ( Au8gust 2013:

JPMorgan, led by Chief Executive Officer Jamie Dimon, is seeking to resolve U.S. and U.K. probes after botched trades by its chief investment office fueled more than $6.2 billion of losses last year. Senate investigators concluded in March that the bank dodged regulators and misled investors amid souring bets by Bruno Iksil, a trader dubbed the London Whale because his positions were so big.

The Huffington Post 8 August 2013:

JPMorgan -- once a darling in Washington -- on Wednesday disclosed a raft of expected enforcement actions that have been broadly mentioned by the bank and its chief executive and chairman, Jamie Dimon, but never before in such detail. Once finalized, the enforcement orders may further damage the bank’s already-battered reputation and lead to heightened scrutiny of its practices.

The Consumer Financial Protection Bureau is investigating JPMorgan's collection and sale of delinquent consumer credit card debt, including its use of sworn documents to pursue bad debts. Kamala Harris, California attorney general, has sued the bank over similar practices.

The Office of the Comptroller of the Currency told JPMorgan it will punish the lender for its credit card collections practices and use of allegedly dubious documents, including for potentially cheating active-duty members of the military under the Servicemembers Civil Relief Act. JPMorgan has previously settled cases under the servicemembers act related to home mortgages.

In addition, the OCC and CFPB have told JPMorgan that they will formally discipline the bank for “unfair or deceptive” practices related to identity theft products it previously sold to consumers.

Perhaps in anticipation of expected settlements, the bank increased its estimate of possible legal losses in excess of its reserves by $800 million to $6.8 billion…

According to www.jpmorgan.com:

 J.P. Morgan’s Oil & Gas Investment Banking group provides investment banking services to the oil and gas industry on a global basis. Our clients include many of the world’s leading players and producers. The group is headquartered in New York, with additional offices in Houston, Calgary, Toronto, Europe, Latin America and Asia Pacific….

The Oil & Gas Investment Banking group covers the complete oil and gas value chain, which includes exploration and production, natural gas processing and transmission, refining and marketing, and oilfield services.….

Through its subsidiary, JP Morgan Nominees Australia Ltd,  JP Morgan Chase is one of the top shareholders in many companies involved in the Australian coal seam gas industry, including Metgasco Limited and ERM Power Limited.

It would appear that all the dogs have fleas when it comes to coal seam gas.

What Murdoch University doesn't mention about one of its Senate members

This is what Murdoch University in West Australia states about Antonino Mario 'Tony' Iannello who has been an external member of its Senate since at least 2006:

Click on image to enlarge

What it does not say is that he has been a director of ERM Power Limited since July 2010 and is currently a shareholder in that company through what appears to be a family superannuation scheme.

ERM Power is the largest shareholder in Metgasco Limited, a coal seam gas exploration and mining company currently holding tenements on the NSW North Coast and operating without a social license from local communities.

ERM appears to have markedly increased its shares in Metgasco as part of a strategy to increase its slice of  the Australian east coast electricity supply market and with a view to taking advantage of conventional and coal seam gas production opportunities in New South Wales.

Given the widespread opposition to coal seam gas exploration and mining, it is no wonder Murdoch University does not have that association up on its web pages. Particularly as Tony Iannello is currently chair of the university's Resources Committee which has investment capability as part of its duties:

 a. Oversee the development of the University’s key strategy of building ‘wealth’ to support the University’s long term educational goals. 
b. Oversee the investment of all monies of the University (including monies held in trust). 
c. Exercise oversight of the finances of all University trusts and foundations. 

One has to wonder if Murdoch University itself is quietly investing in the coal seam gas industry, given the background of the committee chair.

One also has to wonder why Mr. Iannello, living in his plush WA suburban MacMansion with its pool and tennis court, would consider associating himself with a mining sector which has the potential to threaten water security, local economies, lifestyle and amenity in the far away Northern Rivers region of New South Wales.

Perhaps he considers ERM Power's directors fees too good to refuse?

When you live like this why would you hold back from assisting Metgasco Limited to turn sections of the Northern Rivers into 1,000 well-strong coal seam gas fields?

Trevor Charles St Baker and various members of his family - through ERM Power Limited where they and entities associated with them comprise an estimated twelve of the top twenty shareholders - have a considerable interest in Metgasco Limited a coal seam gas exploration and mining company with tenements on the NSW North Coast.

Therefore it might be suggested that the St. Baker family appear to endorse the potential for coal seam gas mining in the Northern Rivers.

This is the gated estate on which Trevor and some family members live:

…one of Brisbane’s most exclusive acreage enclaves…….From the postcard perfect gated entry, a sealed road meanders through magnificent community grounds studded with jacaranda and myrtle, past the tranquil lake area……The views are simply amazing, capturing Brisbane & beyond to Moreton Bay on a clear day.

The estate is understood to have two golf greens and a 12 ha communal park area.

Google Earth aerial view of part of Lot 2 on the estate

 

A far cry from the decidedly more modest homes in Casino, Doubtful Creek and Glenugie on the NSW North Coast, where Metgasco has been sinking some of its exploratory and pre-production wells.

A lifetime away from the tens of thousands of ordinary workers and returned servicemen and women who were born in, raised their families across, or retired to, this environmentally diverse and culturally enriched region.

Which might explain why ERM Power has been buying up Metgasco shares at a time when it is increasingly obvious that a great many local communities have rejected coal seam gas mining and production in the Northern Rivers and will never grant a social licence. It does not see these communities as having value.