A desperate Metgasco Limited can not put a corporate foot right

Metgasco Limited/ASX Media Release

Monday 16 March 2015

Metgasco today announces that it has terminated its merger with Elk Petroleum.

The proposed merger was subject to a number of conditions precedent, including Metgasco's ability to raise funds to support the merger and a Material Adverse Condition (MAC) associated with oil prices.

The oil price MAC has been triggered.  Based on discussions with numerous financial organisations, Metgasco has concluded that the chance of securing acceptable finance is now very low.  This is due to a number of factors, including current oil prices, which are significantly lower than anticipated when the original merger terms were negotiated.  As such, Metgasco's Board of Directors, has decided to exercise Metgasco's rights and terminate the Merger Implementation Deed.

Under the terms of the Convertible Loan Facility, which was put in place to support Elk Petroleum through the merger implementation period, no further payments to Elk Petroleum will be made and Elk Petroleum has 30 days in which to repay the loan plus interest incurred.  Of the overall A$2.5 million loan facility, A$1.69m has currently been drawn down.  The loan is secured against Elk and all its assets.

Metgasco is disappointed that this opportunity has not been successful and will continue seeking means to realise value from its Clarence Moreton Basin exploration acreage and identifying opportunities outside of NSW.

About Metgasco

The Natural Gas Company - Metgasco Limited Our business is about finding, producing, marketing and delivering gas from natural gas reserves.  We are a natural gas company that is focused on developing the coal seam gas and conventionally trapped gas resources of the New South Wales Clarence Moreton basin. 

BACKGROUND

ABC News 25 February 2015:

Metgasco has now accumulated losses totalling almost $120 million.

The gas company's latest financial report was released yesterday.

It shows Metgasco lost more than $2 million in the six months to the end of last year.

Company directors say it incurred significant legal expenses in its Supreme Court action against the New South Wales Government.

It is still waiting on a decision regarding the suspension of drilling approval at Bentley.

Metgasco lost a similar amount over the last half of 2013, and its accumulated losses now total more than $119 million.

Total equity is listed at almost $10 million.