31 January 2020
QUARTERLY ACTIVITIES REPORT
PERIOD ENDED 31 DECEMBER 2019
Metgasco Ltd (ASX: MEL) (“Metgasco” or the “Company”) made significant progress in the December 2019 quarter to focus the business on high impact, onshore Cooper/Eromanga and Perth Basin assets. The Vali-1/Vali-1 ST1 exploration well in ATP2021 commenced drilling in mid-December and following a gas discovery in mid-January with over 35 m of conventional net-pay in the Patchawarra Formation, was cased and suspended. In late November the ATP2021 JV executed a term sheet to negotiate a binding farm-in agreement with a subsidiary of Senex Energy for PRL211 paving the way for the Odin gas exploration prospect to be drilled in late Q2 CY2020.
In November 2019 and January 2020, Metgasco signed a binding term sheet followed by a Farm-in agreement with Vintage Energy to fund 50% of the Cervantes exploration well in the northern Perth Basin permit L14. The Cervantes exploration prospect, planned for drilling in Q32020, is considered to be one of the largest undrilled onshore oil prospects in this basin.
Metgasco’s strategy to be the partner of choice focussing in Australian premium onshore basins has delivered a foundation gas discovery and with two further, fully funded high impact exploration wells to be drilled later in CY2020
Metgasco reduced the quantum of the upcoming in-specie return of Byron Energy Limited (ASX: BYE) (Byron) ordinary shares to Metgasco shareholders from 30 million to 20 million shares to enable the Company to be fully funded for exploration activities in CY2020.
The Metgasco Board continues to recommend that Metgasco shareholders reject the Melbana all scrip take-over offer, which the Board believes significantly undervalues Metgasco’s shares
Key activities during the quarter ended 31 December 2019 (“Quarter”) comprised:
- In October 2019 Metgasco proposed an in-specie distribution of Byron shares. Legal and tax advice was sought for the distribution. In December the quantum of shares to be returned was reduced to 20 million to enable the Company to fund an additional exploration farm-in the Cooper/Eromanga. The in-specie return will be presented at an EGM shareholders’ meeting which is planned for Q12020;
- On 15 November a binding term sheet was signed with RCMA Australia Pty Ltd (“Jade”) and Vintage Energy Ltd (ASX: VEN) (“Vintage”), with Vintage to fund 50% of the Cervantes exploration well for a 30% participating interest. In addition, Vintage will finance $200k worth of future exploration costs. Vintage also has the first right of refusal to participate in the optional well in L14 with the same commitment obligations and earned interest proportions as Cervantes;
- On 22 November the ATP2021 JV executed a term sheet to negotiate a binding farm-in agreement with a subsidiary of Senex Energy Ltd (ASX: SXY) (“Senex”) for PRL211, adjacent to ATP2021 in the South Australian side of the Cooper/Eromanga Basin. The Odin gas prospect, targeted to spud in late Q2CY2020, straddles both permits;
- An independent report by RISC Pty Ltd.(“RISC”) increased prospective resources on the Cervantes prospect, calculating Mid/P50 of gross 17.4mmbo;
- Metgasco’s Target’s Statement in response to the Melbana Energy Limited (ASX: MAY) (“Melbana”) Bidder’s Statement was released to the market on 8 October 2019 and mailed to shareholders on 9 October. The Board of Metgasco unanimously recommend shareholders reject the Melbana take-over offer. A Supplementary Target’s Statement was issued by Metgasco on 24 October recommending shareholders to reject the Melbana offer;
- Melbana issued Supplementary Bidder’s Statements on 3 October 2019, 16 October 2019, 5 November 2019 and 23 December 2019;
- Metgasco’s Annual General Meeting was held on 28 November 2019. Both resolutions, the re-election of Mr. Amery and the remuneration report, were passed;
- CEO terms of employment were updated in December increasing his time commitment from 0.8 Full Time Equivalent (FTE) to 1.0 FTE. Overall remuneration, on an annualised FTE basis, remained unchanged;
- Vali-1 well operations commenced with rig being mobilised to site on 17 December. In late December a plug back and side-track operation was required to correct the well path to remain vertical.
Please click on the attached .PDFs to view full report and the Quarterly Cashflow Report, Appendix 5B.
Philip Amery, Chairman
Phone: +61 02 9923 9100