Metgasco will consider accepting a $25million offer from the NSW Government to buy back the three remaining Petroleum Exploration Licences (PEL) in the Northern Rivers.
The ending, or not, of further coal seam gas exploration in the region is now at the mercy of Metgasco’s shareholders.
A Metgasco media release says the government’s settlement/buy-back, covering PELs 13, 16 and 426, has been the subject of “protracted discussions” since July this year.
“Metgasco’s Board of Directors has given careful consideration to the Government’s offer and unanimously believes that acceptance is in the company’s best interest,” the release states.
“As such, it will be recommending to the shareholders that they vote in favour of the proposal.”
According to Metgasco, terms of the government’s $25million offer include Metgasco withdrawing its legal action in relation to the unlawful suspension of its Rosella drilling approval and the return to Metgasco of approximately $400,000 currently held as securities and other fees.
Metgasco will be responsible for the decommissioning of its two remaining coal seam gas wells – after which the NSW Government will refund the remainder of the securities it holds (approximately $240,000).
Metgasco said it will “put a hold on its court action and suspend all field activities other than simple maintenance of sites” prior to a shareholder meeting, which will consider the settlement.
Metgasco expects the proposal, if accepted, to “give the company a cash backing of $0.074 per share”.
Meanwhile, the Nationals are championing this development as a “major step towards a CSG-free Northern Rivers”.
Member for Clarence and Parliamentary Secretary for the North Coast, Chris Gulaptis, said in a media release that his party was “achieving for the North Coast through the successful PEL buy back process, which had reduced … PELs in the Northern Rivers from seven to Metgasco’s remaining three”.
“Once again the NSW Nationals team, as part of this government, is showing they are serious about delivering a gas field free Northern Rivers,” Mr Gulaptis said.
“I urge the PEL shareholders to accept this offer from the NSW Government, which recognises both the investment that Metgasco has made [and] the community’s concerns about the industry.”
Metgasco’s chairman, Len Gill, said it was a “difficult decision” for his company’s board.
“The company has invested heavily in the Clarence Moreton Basin for over 10 years and has had significant success in demonstrating large gas resources,” he said.
“[However], the company needs to look forward and consider the different alternatives available.
“The board has to consider the risks associated with ongoing project approval delays, higher costs and difficulties funding activities over the next few years.
“Similarly, the court action to seek damages from the unlawful drilling suspension could yield significant compensation.
“However, it is necessary to take into account that the court case could take some years to resolve and that even if the company is successful, the damages awarded might be much lower than we seek.
“On balance, we believe that it is better to accept the settlement and to move forward.”
The date of the shareholders’ meeting is likely to be towards the end of December.
Metgasco will seek ASIC approval to combine its annual general meeting, currently scheduled for November 30, with the shareholders meeting.
The NSW Government has bought back 17 PELs across the state, covering more than five million hectares.