Coal-seam gas miner Metgasco admitted to the Australian Stock Exchange (ASX) yesterday that opposition to the controversial practice in the northern rivers was partly behind its decision to shelve drilling of one of three proposed test wells in the region this year.
It is the first time the company has told the ASX that social activism was slowing its progress, and potentially affecting its share price, prompting the group CSG Free Northern Rivers to suggest it may be in breach of ASX regulations.
The group has also told media about its observations that a milestone event in the Glenugie drilling process, known as ‘spudding’, was not achieved until more than 24 hours after it was reported to the ASX as having been complete.
Metgasco CEO Peter Henderson said in the briefing, ‘our program started a little later than expected as a result of a range of factors which included rig availability, approvals and some protest action’.
He said the company’s plans are now to complete ‘two CSG core wells, three CSG lateral/pilot wells and a conventional exploration well’.
‘Given the delayed program we have deferred one of the CSG core wells so that we can keep the lateral/pilot wells and a conventional exploration well on schedule.’
Mr Henderson confirmed on ABC radio this morning that the two wells will be the existing one at Glenugie and the site at Doubtful Creek, near Dobies Bight.
He said in the ASX statement the company was also looking to obtain permission to sell gas locally.
‘Our overall objective this year is to take Metgasco from the exploration phase to the production/commercial phase.’
Mr Henderson said the company owned outright exploration licences over 1.1 million acres and had ‘no complications associated with overlying tenure’.
He claimed that the company had ‘support of a broad cross-section of the Casino and Grafton communities’.
SCU law lecturer and activism trainer Aidan Ricketts told Echonetdaily it was a sign of the extraordinary success of the CSG-free movement that Metgasco had postponed the drilling of one of its test wells and had been forced to admit as much to the stock exchange.
He added that Metgasco may still be in breach of ASX requirements despite its admission regarding the well.
‘The ASX’s continuous disclosure requirements oblige them to proactively disclose to the sharemarket any information that could materially affect the share price,’ Mr Ricketts told Echonetdaily.
‘What they’re not disclosing is the size of opposition in the region, the length of time of the Glenugie protest and how long drilling equipment had to be held in their compound while they were paying money to hire it.’
‘Spudding’ claims misleading
A briefing paper on Metgasco’s reports to the ASX compiled by the group CSG Northern Rivers, which was also released yesterday, suggested the company may have misled the market.
‘There is a strong argument that Metgasco needs to be more frank in disclosing to investors the level of resistance it is facing. Particularly where it is taking the step of making pro-active announcements about the progress of its on-the-ground operations. In the absence of balanced disclosure these releases would appear to have the capacity to mislead.’
The document went on to question the company’s claims over its spudding of the Glenugie test well.
‘Spudding’ is the practice of drilling a hole wider than a normal well hole down to the bedrock. Engineers then put in a concrete a casing similar to a footing as the foundation for the drilling that they ultimately plan to do.
Metgasco reported to ASX on Friday January 11 that spudding of the Glenugie test well was completed on Thursday 10.
But protesters at the Glenugie site told CSG Free Northern Rivers that they observed attempts to spud the well continue until late Saturday.
Protester Alan Roberts told the group that ‘one fellow got heat stroke on Friday January 11, which closed the whole operation down’.
‘But a fresh team on Friday night started the futility again. One young Lucas fellow [subcontractor] said, “you’ve done a good job but we’ve just got 50mm to go then we’re through”. Not sure who he was trying to kid,’ he added.
‘On Saturday [January 12] they stopped drilling and lowered the mast at 8am. At 1.14pm the truck with the new surface casing got in and then they started drilling a hole with an oversized post-hole digger on a tractor.
‘So I don’t know how [Metgasco spokesperson] Richard Shields thinks that he can make a statement about spudding happening on Thursday night.’
CSG Free Northern Rivers says the spudding allegation, if proven, ‘would constitute [an] actual misleading statement that requires further investigation and begs a formal response from the company itself’.