30 April 2020
QUARTERLY ACTIVITIES REPORT
PERIOD ENDED 31 MARCH 2020
Metgasco continued to make good progress in the March quarter notwithstanding extremely challenging and unprecedented market conditions due to the outbreak of a novel coronavirus (COVID-19). The Vali exploration prospect was cased and suspended as a gas discovery in January with over 80m of net-pay. An independent expert determined that the Vali structure contained Gross 2C Contingent Resource of 37.7 Bcf (9.4 Bcf net working interest). The ATP2021 JV is planning to stimulate and test the Vali-1 ST1 well in Q3 CY2020 and on success plan to rapidly commercialise the discovery with first gas production anticipated within 12 months. Other key business priorities in CY2020 include the drilling the Cervantes oil exploration well in the L14 licence in the Perth Basin and drilling the Odin gas well in PRL211 in the Cooper Basin.
Key activities during the quarter ended 31 March 2020 (“Quarter”) comprised:
- On 16 January 2020, gas was discovered at Vali-1 ST1 in the primary Patchawarra Formation target. The well has been cased and suspended for future stimulation testing and production. Analysis of the data gathered indicated the discovery of over 80 metres of potential net gas pay.
- On 3 March, an Independent expert review of the Vali-1 ST1 exploration well resources indicated a gross 2C Contingent Resource of 37.7Bcf (9.4 Bcf net working interest). This resource is 7% higher than the pre-drill 2U Best Estimate. Planning Work is underway to stimulate and test the well in early Q3 CY2020.
- A re-stated L14 Western Flank farm-out agreement with Jade and Vintage was executed on 20 January 2020. Metgasco and Vintage will each pay 50% of the cost of drilling Cervantes for a 30% working interest. The Cervantes well is planned to be drilled in Q4CY2020
- On 24 February the ATP2021 JV executed a 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. Metgasco will own net 21.5% of PRL211 licence via paying 25% (circa $1mill) of the Odin exploration well. The Odin gas prospect is similar to the recent Vali gas discovery. The Odin well is planned to be drilled in Q4 CY2020
- In October 2019 Metgasco proposed an in-specie distribution of Byron Energy Limited (ASX: BYE) (“Byron”) shares. In December, the quantum of shares to be returned was reduced to 20 million to enable funding of an additional exploration farm-in the Cooper/Eromanga. The COVID-19 Pandemic has caused a significant drop in worldwide oil prices and significantly reduced the value of our BYE shareholding. In late March, the board decided to defer seeking approval of the planned distribution of 20m Byron shares to the company’s shareholders until the future outlook becomes clearer
- In recognition of the present extraordinary circumstances due the Covid-19 Pandemic and prevailing economic conditions due to the significant drop in oil price the board and directors and CEO have have resolved to reduce their compensation by 50% through to a least June 30 of this year. The CFO /Company secretary has volunteered to reduce his compensation for the same period.;
- On 12 February Metgasco relocated it’s Head office to Perth to support the increasing work activity on the significant Cervantes exploration project. Mr Paul Bird was appointed as Chief Financial Officer and joint company secretary.
Melbana’s unsolicited take-over offer lapsed on 31 January with Melbana owning 27.8 % of Metgasco stock. Only circa 8% of Metgasco shareholders accepted the offer over a circa 5 month period.
Please click on the attached .PDF to view full report and the Quarterly Cashflow Report, Appendix 5B.
Philip Amery, Executive Chairman
Phone: +61 08 6245 0060