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MEL - Metgasco Limited

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Check today's announcement
came out of a trading halt

was up 50%

A billion dollar farmout deal
 
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Re: Metgasco Limited (MEL)

METGASCO AND CS ENERGY ANNOUNCE FARM-IN &
GAS SALE DEAL

• CS Energy to farm-in to PEL 16 with an appraisal commitment of $11 million.

• Goal to establish 540 Petajoules in 2P gas reserves within 15 months. This is in addition to Metgasco’s current commitment to establish 2P reserves of 100 Petajoules over the next 4 months.
• Heads of agreement on gas sale of 18 Petajoules per year to the Swanbank power station in Queensland.
• Total value of gas sale agreement over $1 billion.

Metgasco (ASX:MEL) is pleased to announce that it has entered into a farm-in agreement with CS Energy worth $11 million. The goal of the farm-in is to prove 540 petajoules (PJ) of 2P gas reserves to supply 18 PJ of gas per year to CS Energy which represents a gas sale value of over A$1 billion over the proposed 20 year term.

Through this farm-in agreement, Metgasco plans to increase its 2P gas reserves to 660 PJ over the next 15 months.

In addition, a new gas pipeline between NSW and Queensland will be built and owned by Metgasco to supply gas to the Swanbank Power Station in Queensland.

Under the farm-in agreement, CS Energy will spend $11 million in two stages to earn an initial 15% interest in the coal seam gas rights to three graticular blocks within PEL 16 near the northern NSW town of Casino. The farm-in area comprises approximately 27% of the surface area of PEL 16. The first stage will entail drilling 10 exploration wells in the farm-in area. The second stage will entail conducting a pilot appraisal program on a number of coal seams which have not been the focus of the Company’s activities to date. The goal of the appraisal stage of the farm-in is to establish 2P gas reserves of approximately 540 Petajoules.

Once these reserves are established, which is expected to take 15 months, CS Energy intends to invest a further $94.5 million to earn an additional 35% interest in the farm-in area by funding development of the field for the purposes of gas supply to Queensland. Metgasco 1ഊwill continue to be the Operator of the field. Metgasco will immediately commence development work on the proposed gas pipeline to Queensland with a goal to deliver gas by 2010. Metgasco and CS Energy will finalise a gas sale agreement over the next 6 months.

David Johnson, Metgasco Managing Director, said: “We are extremely pleased to welcome CS Energy as our farm-in partner in the Clarence Moreton basin. CS Energy understands the coal seam gas business and has been at the forefront in contracting with coal seam gas companies in Queensland. It is a strong demonstration of CS Energy’s confidence in the coal seam gas industry and in the commercial opportunity offered by Metgasco.”

“The investment by CS Energy will double the exploration expenditure spent on our field to date and will dramatically fast-track the commercialisation of our Casino operations by underwriting both the development of our gas reserves and the construction of key gas transportation infrastructure,” Mr Johnson said.

Mr Johnson said: “Metgasco holds the largest certified gas reserves in NSW and this project will bring a significant percentage of our 3P gas reserves into the 2P category, which is required to enter into gas sale contracts. Currently we have established 22 PJ of certified 2P gas reserves. These reserves are for a single seam in a small area at South Casino. We are about to commence drilling at South Casino to expand our 2P reserves to 100 PJ which will establish sufficient reserves to supply the Richmond Valley Power Station. Our project with CS Energy is in the north of the tenement area and will significantly expand our gas reserves. Within 15 months the Company will have established over 660 PJ of 2P gas reserves. Metgasco will continue to focus on gas sale opportunities from additional gas resources in the Clarence Moreton basin, which contains up to 5,000 PJ of coal seam gas, in addition to conventional gas.”

Metgasco’s field has the largest independently certified gas reserves in NSW. This commitment will fast track the development of a major new source of gas supply for both Queensland and New South Wales. It will also contribute to regional development and employment in the Northern Rivers region in which Metgasco’s project is located. The project is the closest gas supplier to the coastal regions of South East Queensland and North East New South Wales which are the fastest growing energy markets in Australia.

Metgasco has secured Mitchells Rig No 107 to undertake this drilling program which is expected to commence in January 2007.
 
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Re: Metgasco Limited (MEL)

Market cap around $40m even at 50c/share doesn't seem that expensive considering the magnitude of the ann.

I am considering purchasing some of these. Anybody else have any thoughts on the value here?
 
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Re: Metgasco Limited (MEL)

Alien said:
Market cap around $40m even at 50c/share doesn't seem that expensive considering the magnitude of the ann.

I am considering purchasing some of these. Anybody else have any thoughts on the value here?
alien did you purchase ? this is heading to $1.00 plus short term... is my guess... strong support at each price spike ...
cracked 70 cents today... still under the radar..
 
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Re: Metgasco Limited (MEL)

pussycat2005 said:
alien did you purchase ? this is heading to $1.00 plus short term... is my guess... strong support at each price spike ...
cracked 70 cents today... still under the radar..
Yep, i bought at 51c soon after the ann. Am going to hold at these levels. I believe it can make the $1 mark. Market Cap looks cheap compared to what CS Energy are going to invest.

I believe companies that hold assets around the Wallumbilla area in SE QLD will do well. This area is the hub from which gas is being distributed. Talks of pipelines being sent as far south as Newcastle. This has to raise the price of GAS available to what companies in QLD are currently getting and i think CS Energy has seen that.

I am also holding MOS (which i have done for some time). They own some great assets in the form of separator plants and LPG plants there as well as some good exploration assets.

Likely to be more consolidation in this area with STO, AGL, CS Energy and maybe more. Interesting times ahead IMHO.

Alien
 
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That's a good buy i bought at 72c then sold at 74c. I might actually buy again make a little more profit from this sucker :).
 

chops_a_must

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Has anyone else been looking at this one? What are people's opinions?

Almost looks like an AOE without the international projects. Even the charts look similar, with MEL following AOE by about 2 and a half months:

aoemel.jpg


Buyers aren't letting this one get below 80c, and volume pushes it up quickly.

And given that energy is going to be a huge talking point this year, with nuclear and green being the forefront, I expect gas stocks to do well this year as it is the undeniable middle ground. But that is just my opinion.

Anyway, gas stocks did very well weathering the last correction and I expect it will be much the same story over the next few weeks.

Not a holder but just looking for opinions, as it looks pretty good to me, being the biggest holder of gas reserves in NSW.
 

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I think they need to shore up their reserves in northern nsw. Then the deal with CS Energy for the Ipswich powerstation (Swanbank) can go ahead.

Eastern Star Gas is another that you should have a look at if you are interested in Gas in NSW.....their deal announced yesterday bodes well for the future.

They are in a similar boat to MEL in that they have signed an agreement with a power station - Bayswater. But both MEL & ESG need to prove up their reserves. Once they both do they become takeover targets particularly with such deals (Bayswater & Swanbank in the pipeline). The ESG deal is the equivalent of $1.5 billion. There is an article today in SMH in the business section.

ESG at 30c seems reasonable value considering its future to supply NSW. Both companies though will improve their value as future positive announcement continue to be released.

I hold neither but have a professional interest in the CSM industry and hold Arrow. But I would be untruthful to say I haven't looked at MEL or quite a few others.
 

chops_a_must

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Jimminy said:
I think they need to shore up their reserves in northern nsw. Then the deal with CS Energy for the Ipswich powerstation (Swanbank) can go ahead.

Eastern Star Gas is another that you should have a look at if you are interested in Gas in NSW.....their deal announced yesterday bodes well for the future.

They are in a similar boat to MEL in that they have signed an agreement with a power station - Bayswater. But both MEL & ESG need to prove up their reserves. Once they both do they become takeover targets particularly with such deals (Bayswater & Swanbank in the pipeline). The ESG deal is the equivalent of $1.5 billion. There is an article today in SMH in the business section.

ESG at 30c seems reasonable value considering its future to supply NSW. Both companies though will improve their value as future positive announcement continue to be released.

I hold neither but have a professional interest in the CSM industry and hold Arrow. But I would be untruthful to say I haven't looked at MEL or quite a few others.
Cheers for the info. I appreciate it a lot.

I read something with ESG yesterday. Here it is actually:

COAL seam methane junior company Eastern Star Gas and joint venture partner Gastar Exploration have signed a memorandum of understanding with New South Wales Government-owned power company Macquarie Generation to investigate the supply of gas.




According to Eastern Star managing director Dennis Morton, a potential long-term gas supply and purchase agreement for Macquarie Generation's Bayswater Power Station expansion could reach as much as 500 petajoules in total and increase the state's gas consumption by 25%.

"This is a very exciting commercial development and represents a watershed for both our Gunnedah Basin gas project and for NSW," he said.

"It could provide us with a large gas market that will underpin development of gas pipeline infrastructure and as the foundation for the large-scale development and sale of natural gas within NSW.

"NSW will at last have a truly major, indigenous source of natural gas."

The Gunnedah project is in inland northern NSW and will have to be linked by a 300km pipeline running from Narrabri to the Bayswater Power Station, which lies about 100km northwest of Newcastle.

Macquarie Generation is Australia's largest electricity producer and owns and operates two coal-fired power stations in the Hunter Valley – Bayswater (with a capacity of 2640MW) and Liddell (2000MW).

The two stations can produce the equivalent of 40% of the state's electricity requirements.

Eastern Star and Gastar are in the process of commercialising the Gunnedah Basin CSM project, aiming to achieve initial certified gas reserves by the third quarter of this year.

The partners claim their PEL 238 lease contains about 17 trillion cubic feet of gas-in-place and the 256 square kilometre Bohena Project Area contains more than 3Tcf of gas-in-place.

Eastern Star holds 65% of the Gunnedah Project; Toronto Stock Exchange-listed Gastar holds the remaining 35%.
But given the bullish performance of small and mid cap gassers over this correction period, I'll definitely look at getting in. And I should have some extra money to play with given I'm going to get out of QGC (the recent deal seems to have put a ceiling on the price and stunted mid term growth).

But thanks very much for the info. Still looking at every gas stock I can find right now. CTP is another that comes to mind...

Hope it all goes well for you, and go Arrow!
 
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chops_a_must said:
it looks pretty good to me, being the biggest holder of gas reserves in NSW.
With 17 TCF that would make ESG the biggest gas holder (edit: for a single reserve at least) by quite a margin would it not.....can't remember what MEL has supposedly got under their ground but I believe they already have certified reserves unlike ESG.

Perhaps MEL probably the safer bet due to their certified reserves.

I'll stick with my Arrow for now - not complaining there. Been waiting patiently for this rerating. Should have happened along time before this.
 

chops_a_must

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Jimminy said:
With 17 TCF that would make ESG the biggest gas holder (edit: for a single reserve at least) by quite a margin would it not.....can't remember what MEL has supposedly got under their ground but I believe they already have certified reserves unlike ESG.

Perhaps MEL probably the safer bet due to their certified reserves.

I'll stick with my Arrow for now - not complaining there. Been waiting patiently for this rerating. Should have happened along time before this.
Yah. It's about the certification I think. ESG looks to have had a weak up leg over the last few days, so I will be looking to get in on the down move.

But yes, ESG looks very good.
 

chops_a_must

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chops_a_must said:
Almost looks like an AOE without the international projects. Even the charts look similar, with MEL following AOE by about 2 and a half months.

Anyway, gas stocks did very well weathering the last correction and I expect it will be much the same story over the next few weeks.
MEL now breaking out, almost right on cue. Gas stocks certainly look like the place to be...

Luckily did end up on this one.
 

chops_a_must

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Jimminy said:
Well done. They seem to like the drilling report - haven't read it yet.
Could be looking like an outstanding breakout before long. Is anyone else on this? Beginning to look silly on the market depth...

Market Depth
Number Quantity Price
1 3,400 0.870
3 15,240 0.865
2 37,500 0.860
2 13,000 0.850
2 20,000 0.845
1 9,000 0.840
2 35,919 0.830
2 30,575 0.820
2 14,000 0.800
2 10,086 0.795

Price Quantity Number
0.900 34,025 3
0.930 14,000 1
0.940 2,500 1
0.950 7,400 2
0.970 6,000 1
0.990 26,500 1
1.000 21,800 2
 

chops_a_must

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Jimminy said:
With 17 TCF that would make ESG the biggest gas holder (edit: for a single reserve at least) by quite a margin would it not.....can't remember what MEL has supposedly got under their ground but I believe they already have certified reserves unlike ESG.

Perhaps MEL probably the safer bet due to their certified reserves.

I'll stick with my Arrow for now - not complaining there. Been waiting patiently for this rerating. Should have happened along time before this.
The ESG market cap is actually bigger than MEL's at the moment, so that might explain it.

Anyway, x posted to the potential break out thread:

It broke it's all time intraday high today, closed above previous intraday highs, at an all time EOD HIGH near today's intraday high. So it has definitely broken out, and if it can get into the 90s or above $1 it may qualify as outstanding. But right now it looks very bullish to me:

mel15.jpg


With 1/10th the market cap of AOE it seems pretty good.

This move up hasn't been on huge volume, and that's what is worrying me. BUT, if you look at the chart closely you will notice that basically ALL of the rising days have had larger volume. It is tightly held, has been trading in a very narrow band and any weakness has been pounced upon by buyers. I suspect that the continual lack of sellers on this one will only see larger volumes moved over the next few days. So this just could be a build up of momentum, as good news has flooded this one recently.
 

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chops_a_must

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MEL placed in a trading halt.

My guess is a takeover (it has been rumoured). And it seems to be having a positive impact on the sector. Has anyone heard anything?
 

chops_a_must

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Well I was wrong. Capital raising (which had also been rumoured).

The SP seems to be holding up rather well. Maybe it had already been factored into the SP? But now MEL is a cashed up company, with excellent prospects and large amount of certified reserves. And these are set to increase drastically over the next year or so. The report that they released post the original announcement is rather enlightening.
 
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I'll stick with my Arrow for now - not complaining there. Been waiting patiently for this rerating. Should have happened along time before this.
And it keeps getting better with Arrow!!....

Interesting that MEL have set a 660PJ target within 12 months for 2P reserves. If they do this will move this along. Should be one to watch closely.
 
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