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Metgasco jumps on takeover talk

by: John Durie
From: The Australian
October 05, 2011 3:13PM

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METGASCO'S stock price soared today on speculation the junior CSG company is under potential takeover attack.

The stock is trading up 18 per cent at 51 cents a share in a down market, valuing the company at over $170 million compared to just $110m one week ago.

Queensland based ERM Power has just acquired a 6 per cent stake in the company and given the trading volume other big bets are being laid.

The most obvious player is LNG, which is 20 per cent-owned by China National Petroleum and is building an LNG plant on Fisherman's Landing at Gladstone and is short of gas.

LNG's stock price also rose, up 10.3 per cent today to 38 cents a share.

Metgasco has coal seam gas reserves west of Lismore and Grafton in NSW with some 2.5 TCF in 2P reserves -- the highest uncontracted reserves in the region.

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It has also come under political fire, but given the almost certain massive price increases in east coast gas prices once the Gladstone CSG plants become operational in three years time its reserves also look more valuable.

It would not surprise to see the likes of LNG emerge as a substantial shareholder shortly following ERM's declaration this week.