re: Ann: Metgasco (MEL) appoints Mr Greg Shor... Mossy,...

re: Ann: Metgasco (MEL) appoints Mr Greg Shor... Mossy, everybody accepts that NSW is just a diabolical location to try and develop a business, but accepting that as the prime reason for MEL's current position simply ignores too much of the recent history. And from my point of view, the Board has made too many missteps for all, or even the majority of the problems to be foisted at the feet of Government.

You always have to assume that the Board had better access to data than it makes available to shareholders.

You are right that David was primarily an explorer, and the declared reason for replacing him with Peter Henderson was to move the Company to the development phase. But in two years we have not moved one step closer to the development phase. So the Board either misjudged the position of the Company at the time of Peter's appointment or misjudged Peter's capabilities.

You say that the wells did not perform as expected. True, MEL has so far not managed to achieve the magic 1 mmscfd from a single well; but it is also correct to say that there are not many other CSG companies who have achieved that benchmark with so few wells drilled. The published flows from MEL's wells are as good as the average flows being achieved in Arrow's wells at the time it was taken over by Shell and PetroChina. And Arrow was much further into the development phase than is MEL. Additionally Arrow did not have the conventional potential.

If the Board believed that the potential for the CSG wells was below par, why did they then do two more capital raisings on the basis of drilling additional CSG laterals and commencing commercial production?

In the two years subsequent to Peter's appointment the Company seems to have lost, David (the replaced MD), the CFO, the COO, Corporate Counsel and Business Development Manager plus apparently several other staff. This seems to be a total wipe out of every senior manager following Peter's appointment. Now the loss of one or two senior managers is careless, but the loss of the total management team indicates a deliberate strategy or a disfunctional management. However if it were a deliberate strategy, why did Peter then decide to retrench the entire staff shorthly after he had his preferred appointees in place, on very dubious reasoning?

Then we heard about the apparent debacle around the issue of the Production Lease which should have been a critical step for the Company. Most people would have believed that the Part 3A approval meant that the Production Lease was a mere formality. Obviously not. But then apparently Peter Henderson was trying to further delay the issue of this Lease at a time when the Government seemed to be keen to issue it as a demonstration of their faith in the CSG industry.

Don't even mention the capital raising organised at this time.

And as soon as the lease was issued, MEL then decided that apparently development of the power station, remember one of Peter's key capabilities, was no longer at the top of the priorities.

In March, on the flimsiest excuse MEL, pulled up stumps. The excuse being that the NSW Government was looking at prohibiting CSG drilling within 2km of residential zones unless the local council decided otherwise. The SEPP enforcing this still does not appear to have been promulgated. Now even ignoring that the Richmond Valley Council was very supportive of CSG and may have even agreed to closer drilling than the 2km, the fact is that a 2km limit would have very little impact on MELs activities in the Northern Rivers.

At the time MEL could simply have said, that notwithstanding it was still to be legislated, we would be happy to abide by a 2km limit from residential areas until the matter is settled by the Government. And basically gone ahead with its previously declared plans. But instead they pulled up stumps saying we are not playing here anymore and are going somewhere else. At any time this is pretty immature, but doing it before you have found somewhere elese to play, just smacks of stupidity or arrogance or both. And then trying to do it without the benefit of any "team" where your corporate IP resides is plain riduculous.

Then five months later, MEL appoints someone to the Board whose prime focus will be to look for the other playing field. What was the Board's plan at the time?

I am just incapable of overlooking these multiple and onging failures and simplying accepting that all MELs problems are due to the Government.

Now before everyone starts saying that I am just too negative, let me suggest a plan for MELs Immediate future.

Drill one, or even two, of the conventional wells with the prime purpose of supplying gas to Richmond Dairies under the previously announced contract. It might simplify the approval process if those wells were drilled in the currently approved Production Lease. From the published data and the location of the Kingfisher well that seems possible.

Negotiate another gas sales contract with the Meatworks and aim to supply that from Corella 11 and the Harrier wells, if they have not already been abandoned.

Sign further gas sales agreements with the CNG/mini LNG customers that the Company has been speaking about.

Now unfortunately I suspect that your assessment is correct. But a takeover at these levels is absolutely ridiculous given the assets of the Company.