GAS explorer Metgasco has hit out at the NSW government’s Office of Coal Seam Gas, saying its investors are facing losses of around $18 million after a decision to suspend a drilling licence at its NSW operations.
The company said the OCSG’s decision to suspend drilling at its Rosella well at Bentley was without notice or justification and represented an extraordinary breach of process.
Metgasco’s chairman Len Gill outlined, in a strongly worded letter to its shareholders, that at no time prior to the suspension had the government or the OCSG expressed any concern over the company’s community consultation program — the reason the office cited for the licence suspension.
Mr Gill said the company had made direct representations to NSW Premier Mike Baird to seek an immediate review of the licence suspension.
It has also requested that the OCSG suspend temporarily its own review.
The company was forced to suspend all work on its Rosella E01 exploration well until it can demonstrate to the satisfaction of the OCSG that it had complied with a condition on the licence regarding community consultation.
Shares in the company almost halved after the suspension announcement last Thursday and have continued to track lower, closing down 6.5 per cent at 4.3c yesterday.
Given the company had received environmental approval to drill its Rosella well, the drilling rig had been prepared and was ready to mobilise to the site when the suspension was announced. Metgasco said the suspension would result in a direct loss of up to $3m.
Mr Gill said the OCSG had provided little basis to support its reasons for suspending the licence.
He added that the company’s process of community consultation had not been questioned by regulators previously.
“In the event of the OCSG believing a suspension notice was justified, the company should have been asked, as a minimum, to show cause or be questioned about the nature of what remains a vague complaint before suspension action was taken,” he said.
“Instead there has been no process, no opportunity for explanation or correction — rather a summary denial of natural justice.”
NSW’s Resources and Energy Minister Anthony Roberts also announced last week that he had referred the company’s exploration licence to the Independent Commission Against Corruption.
Mr Gill said that while Metgasco is a strong supporter of the ICAC and makes no complaint that someone has made a referral to the commission, it did take exception to the public announcement that an ICAC referral had been made.
“The announcement has the potential to interfere with ICAC’s processes and, from our perspective, has caused severe damage to our reputation before ICAC has even been able to consider the referral and before we have had a chance to respond,” he said.
“It is difficult to see how the public announcement was just treatment of Metgasco.”
The company said it remained committed to the gas resources in the Northern Rivers region and working with government to enable the realisation of the commercial potential of the Northern Rivers gas resource in the medium term.
MEL Price at posting:
4.4¢ Sentiment: LT Buy Disclosure: Held
