Junior gas miner Metgasco has revealed that it rejected a government offer regarding ‘the future of gas exploration and development in the northern rivers’ in its annual report released yesterday.
And it has set a high bar for any future offer to buy back the company’s northern rivers CSG licences, saying any terms must ‘reflect the facts that Metgasco has, in good faith, invested $128 million in operations on licences issued and renewed by successive governments over more than 10 years, and that Metgasco has established significant coal seam gas reserves and identified exciting conventional gas potential.’
The company announced that it lost $3.85 million in the 2015 financial year.
The report also reveals that Metgaso CEO Peter Henderson was paid $ 425,916 and executive director Sean Hooper received $234,544.
Neither Mr Henderson or Mr Hooper were granted long-term or short-term share bonuses during the period.
An unexpected expense during the financial year was the decision to take the NSW Government to the Supreme Court over the Office of CSG decision to suspend its Bentley licence. That further set Metgasco back a quarter of a million dollars.
Metgasco’s share price dropped by 40 per cent following the government’s suspension.
The company will be expecting further court costs this financial year after it cut off compensation negotiations with the government in August and decided instead to return to court.
‘The suspension compensation that Metgasco is seeking covers damages associated with drilling cancellation costs, higher costs for future drilling, overhead costs while the court action was taking place, delays to its exploration and development program, and damage to investor confidence,’ the report says.
‘Metgasco made it clear to the NSW Government that it prefers to negotiate compensation for damages out of court and advised the Government that it was prepared to put a hold on court action until August 31, 2015, while negotiations proceeded.
‘Given negotiations to that date did not resolve the matter, Metgasco initiated court action for damages.’
The company says it is also seeking, ‘explicit public confirmation from the NSW Government that it supports Metgasco and the gas industry in NSW and that it is prepared to provide police support [our italics] for Metgasco’s lawful exploration activities.’
The directors’ report concludes that the challenges facing Metgasco in 2016 are to either: proceed with our NSW exploration and development program and seek damages from the NSW Government for the unlawful 2014 drilling suspension, either through negotiation or in court; or withdraw from the NSW assets if the Government is prepared to offer buyback terms that are acceptable to your board and approved by shareholders, while continuing to seek business opportunities outside NSW.’
The matter is expected to reach court in December.