METGASCO has formally triggered its option to participate in the drilling of the Bivouac Peak prospect in Louisiana, in addition to its indirect exposure in the drilling via its investment in Byron Energy.
Metgasco’s initial well costs are not expected to exceed $US1.33 million ($A1.73 million).
Having completed substantial due diligence, including technical review of data with Byron at its Lafayette operations hub, Metgasco believes Bivouac Peak represents a very attractive risk/return opportunity for its cash, which is a legacy of its decision to sell out of the New South Wales CSG hunt in the face of government pressure.
Byron this week released its initial independent reserves report on Bivouac Peak.
The independent report, prepared by Texas-based Collarini Associates, concluded that there is a gross prospective resource potential of 15.99MMbbl and 177 billion cubic feet within the leases, based on the seismic data.
Byron holds a 90% working interest and a 67.05% net revenue interest at Bivouac Peak, but it is farming down to Otto (earning 45% WI) and Metgasco (10% WI).
An initial test well is planned at Bivouac Peak in 2017, which will expose Byron and its farm-in partners, plus US-based Aurora Exploration (10%), to 32.270MMboe of gross potential.
Byron will reduce to a 35% WI (26.075% NRI), which will give it net prospective resources of 4.2MMbbl and 46Bcf.
Metgasco will take a 10% WI (7.45% NRI) which will give it a potential 1.6MMbbl and 17Bcf.
Otto says its exposure for its 33.525% NRI will be 5.36MMbbl and 59.56Bcf by funding 60% of the well costs to a cap of $6 million.
Costs beyond that will be paid pro rata.
Metgasco, which has $17.7 million in cash and investments and managed credit funds of $10.9 million, has just been paid the first $A40,000 from Byron under a funding agreement agreed to last year.
Metgasco is also looking for other opportunities away from Byron, but in the meantime it has decided to reward its shareholders, many of whom suffered through years of uncertainly when Metgasco found itself a political football in NSW, with a capital return of 2.5 cents per share.
Metgasco shares were up yesterday to $0.057.
Share this story:
MEL Price at posting:
5.8¢ Sentiment: None Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)