Northern Rivers communities having contact with Metgasco Limited have come to understand that this coal seam gas exploration and company mining is not a good corporate citizen and, that it is often a stranger to the truth in its dealings with both local residents and media.
It has been a long time coming but finally larger shareholders are noticing what smaller shareholders appear to have known for some time - that the Metgasco board is all talk and no walk.
http://www.asx.com.au/asxpdf/20130930/pdf/42jprppqc9wrj8.pdf
27 September 2013
The
Shareholders Metgasco Limited
Dear
Fellow Shareholders
Over
the past months a number of significant shareholders in Metgasco Ltd (the
“Company” or “Metgasco”) have expressed their disappointment in the performance
of our Company to the CEO and Board of Metgasco. This group of shareholders
includes the founders of the Company, shareholders who have supported the
Company since listing in December 2004, shareholders located in the Northern
Rivers region and proposed local gas customers of Metgasco.
Over
the past two and a half years two highly dilutive capital raisings have been
undertaken and almost 200 million new shares have been issued. These capital
raisings at historically low prices have diluted shareholders of the company by
over 50%. No tangible progress has been made by the Company with the proceeds
from these capital raisings despite over $27 million being spent by the Company
in this period. Most recently (25 July 2013) the Board of the Company decided
to reward this performance by the issue of over 10 million shares to employees
at a price 20% below the current trading price of the shares.
This
group of shareholders has supported the Company through difficult
circumstances. However, activist opposition and government dithering does not
excuse the Company’s total lack of direction, high spending levels, inadequate
planning and an inability to communicate with shareholders.
This
group of fellow shareholders is very concerned that there is no strategy for
the Company going forward evidenced by the confused letter sent to shareholders
by the Company dated 9 September 2013.
Today
these shareholders have given notice to the Company of resolutions that they
propose to move at the next general meeting of Metgasco and have requested that
a meeting be convened by Metgasco to consider these resolutions.
The
Proposing Shareholders have nominated three directors to the Board of Metgasco
with the intention of ensuring that the strategy of the Company is re-directed
towards improving the performance of Metgasco so as to enhance its share price.
The interests of the Proposing Shareholders are wholly aligned with other
shareholders of the Company which is to ensure that Metgasco achieves its full
potential. We do not represent the interests of any other corporate third party.
At the
forthcoming general meeting the Proposing Shareholders intend to vote in the
following manner.
• The
Proposing Shareholders will not support the re-election of Mr Nicholas Heath.
• The
Proposing Shareholders will not support the election of Mr Greg Short.
• The
Proposing Shareholders will not support the Remuneration Report.
• The
Proposing Shareholders will not support the award of shares for the performance
of Mr Peter Henderson in his role as Managing Director.
The
Proposing Shareholders seek the election to the Board of the following:
• Ms
Glenda McLoughlin
• Mr
Michael O’Brien
• Mr
Stuart Glenn
Summary
biographies of these nominees are attached.
Metgasco
needs to be focussed and determined at the Board level. The Proposing
Shareholders expect that a refreshed Board will ensure enhanced financial
discipline and re-focus the efforts of the Company on its core strengths.
We
urge you to support this initiative to revitalise the Board of Metgasco.
Yours
faithfully
John
Vaughan
On
behalf of the Proposing Shareholder Group
Metgasco Limited 2013 Annual Report here.
*Northern Rivers residents may recall Byron Bay residents Mr. Vaughan as a letter to the editor writer and online commenter in defence of Metgasco and the coal seam gas industry.
UPDATE
In an obvious effort to stem the shareholder revolt and butress its weak share price, Metgasco Limited issued this media release on 2 October 2013:
METGASCO
PLANS TO RECOMMENCE GAS EXPLORATION IN NORTHERN RIVERS NSW
2
October 2013
Metgasco
(ASX: MEL) today advises the following:
Metgasco
Limited (ASX: MEL) is pleased to announce today that it is initiating plans to recommence
gas exploration. The company plans to drill the Rosella-1 conventional gas well
in its
exploration permit PEL 16 located in the Northern Rivers region of NSW.
Commenting
on developments, Metgasco’s Managing Director, Peter Henderson, said that today’s
announcement reflects positive regulatory and political developments.
“Six
months ago, Metgasco suspended field operations when the NSW government
announced major
changes to regulatory and administrative procedures. Like Metgasco, major
industry players
also chose to suspend activity in NSW at that time. However, recent regulatory
and political
developments, particularly since the September Federal election, have
encouraged Metgasco
to initiate the activities necessary to enable field operations to recommence”,
added Mr
Henderson.
Metgasco
participated in the successful NSW Energy Security Summit on 26 September 2013, at which
the serious gas shortages facing NSW consumers over the coming years were given extensive
media coverage. Major energy users, farming community representatives and other stakeholders
joined gas explorers and producers in reviewing the very disturbing forecasts
of steep
gas price increases in all eastern states.
There
was strong acknowledgement at the summit by key stakeholders that price
increases and potential
gas shortages could only be mitigated by additional supplies of gas. In
particular, the NSW
Resources and Energy Minister, the Hon Chris Hartcher MP, expressed support for
NSW gas
explorers to pursue new gas supply sources to help moderate the inevitable gas
price increases
faced by NSW gas consumers. He also made clear to stakeholders that the NSW government’s
tight environmental requirements were to remain.
In order
to successfully complete exploration drilling, Metgasco will be working with
the regulators
and conducting a community consultation program to ensure that environmental concerns
are addressed and the environmental objectives of the NSW government’s
regulatory regime
are satisfied, and the community is aware of the Company’s operations.
Following
the recent Federal election, the new Federal Industry Minister, the Hon Ian Macfarlane
MP, has initiated processes to facilitate dialogue between gas explorers and
farming groups
in order to bring about a resumption of gas exploration and development in NSW.
This work is
greatly valued. Mr Macfarlane is supportive of the gas industry and is working
to harmonise
and simplify regulations across state and federal boundaries. Metgasco strongly supports
the need for smart regulation based on sound science.
For over
10 years Metgasco has operated successfully in the Northern Rivers region and
has enjoyed
the strong support of the majority of landholders and community members with whom the
Company works. Over this period, 300 landholder agreements have been put in
place, and over 50
wells drilled. Polls conducted by the Richmond Valley Council also show
community support
for the natural gas industry.
The
Rosella-1 exploration well is to be drilled to a proposed total depth of 2,100m
on a site 12 km to
the northeast of Casino. The well is a commercially high risk well that will
test the non-CSG,
conventional gas potential of the Greater Mackellar structure. The prospect is
interpreted to cover
an area of 260 km² and hold a potential mean volume of 1,304 BCF of gas in
place, comprising
an estimated 456 BCF in the Ripley Road sandstone and 848 BCF in the Gatton sandstone.
The primary objective is the Ripley Road sandstone which was tested in
Kingfisher-1 at an
initial rate of 3MMcf/d. The well will also test the thick sequence of gas
bearing strata in the
Gatton sandstone which had low permeability in Kingfisher-1, together with the
deeper Basal
Bundamba Sandstone (a lateral equivalent to the Laytons Range Conglomerate),
Ipswich and
Nymboida Coal Measures which were below the total depth reached in
Kingfisher-1.
If
successful in encountering gas, it is likely the well will be tested to assess
gas production potential.
Metgasco does not currently plan to conduct hydraulic fracturing of the well.
However, in the
event that it is later determined that hydraulic fracturing has the potential
to increase the economic
potential of the well, provision will be made for later well re-entry and
fracture stimulation.
This would be similar to the Kingfisher-1 discovery well where a limited 3m
interval was
fractured to stimulate gas flow in 2010.
The
Company is committing to carry out the preparatory work over the coming months.
A final commitment
to drill the well is to be made when a suitable drilling rig has been
identified, regulatory
permits are in hand, and discussions with key stakeholders have taken place.
There must
also be a continuing expectation that the regulatory and political environment
will continue to
improve, providing stability and support. With confidence restored, the support
of key stakeholders
and the timely receipt of approvals, it is anticipated that the well will be
drilled in the
first half of 2014, depending on rig availability.
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.
We have
established a large natural gas reserve base and are in the process of
converting our gas reserves into gas supplies delivered to customers.
Metgasco has grown its reserve base at a very low cost relative to other
companies. Our finding cost per gigajoule of 2P reserves is amongst the
lowest in Australia. This provides the basis for shareholder value creation
in the future.
Michele
Perry
Metgasco
Limited Direct:
+61 2 9923 9124
