Is Metgasco being entirely honest with the Northern Rivers?

No-one can deny that Metgasco Limited is a listed public company incorporated in New South Wales, Australia or that it is considered a ‘junior’ coal seam gas mining business.

Also on the public record is the fact that it is the ultimate holding company for Clarence Moreton No.1 Pty Ltd and The Lions Way Pipeline Pty Ltd, as well as being a shareholder in Richmond Valley Power Pty Ltd.

Like many other mining corporations its directors and senior staff have worked for many players in the industry, including Exxon Mobil, and some like Steven Joseph Koroknay hold multiple directorships.

Even Metgasco’s largest shareholder CSG Nominees Pty Ltd is registered in this country – in Perth WA.

All in all it would appear that Metgasco is a true blue Australian company with its eye set firmly on the domestic market as it stated on 24 January this year:

we are seeking approvals to allow us to sell gas locally… by year’s end… to local businesses…

Then there is this.................

Metgasco’s largest shareholder is a wholly owned subsidiary of Liquified Natural Gas Limited (LNG).

LNG’s major shareholder as of 5 February 2013 is China Huanqiu Contracting And Engineering Corporation (HQC) which in turn is owned by the Chinese Government.

This is a flow chart of the relationship between Metgasco, LNG and China.

It would seem that any local gas sales are a minor consideration and that Metgasco sees its future in the export market once Fisherman’s Landing is completed.

Supplying LNG with between 90-260 tj of gas per day for a minimum of 15 years, which appears to be almost all of the total projected daily production at Casino under its current license.

A sustained supply volume which is problematic given that in 2013:

A Bell Potter energy analyst, Johan Hedstrom, said the quality of the coals in the Clarence Moreton Basin was "not as good as it is in the Surat Basin" in Queensland, where much of the CSG development is based. Mr Hedstrom said the coals were lower-permeability which made it difficult to get commercial rates of flow, as Metgasco had found.

"There's a question mark, really, on whether these coals are going to be productive in a commercial sense.  

 

So where is Metgasco heading with its business plan? Is it being honest with North Coast local governments about its prospects? Will it able to meet either the domestic or export aims?

The impediments are obvious; the low rate of proven commercial flow, its present inability to fund construction of the proposed Lions Way pipeline between Casino and the Ipswich gas hub, the fact that in 2012 its major investor had to declare a $6.5 million impairment to its own shareholders due to Metgasco’s sustained low share value, its 17th largest shareholder just publicly abandoning it on ethical investment grounds and, a closing share price on the Australian Stock Exchange yesterday of less than 10 cents.