Metgasco Downgrades Gas Reserves Citing 'Political Climate'

Australia listed Metgasco on Friday said it has reclassified its assets and gas reserves, citing uncertainty in the New South Wales (NSW) political climate.

The company said that its Board determined that “it was appropriate to reduce the value of previously capitalised exploration and evaluation expenditure to nil, and reclassify its reserves to resources. This is despite the Company’s confidence in NSW needing its gas supply and in the medium term development of the company’s coal seam gas resources.”

Although there remains a degree of uncertainty regarding the timing of recommencement of exploration activity in the company’s exploration licence areas, Metgasco remains committed to its plans to evaluate the potential of the conventional and tight gas resource at Rosella and to progress the appraisal and commercialisation of its discovered CSG resources elsewhere in the area, the company added.

In May this year, the NSW Government's Office of Coal Seam Gas suspended Metgasco's permit to test drill a tight sands gas well on a Bentley property in May. The Government said that he decision was taken on the basis that Metgasco had not met its obligations to consult with the community. 

Metgasco believes this was completely without foundation as it had conducted its consultation program in accordance with the Government’s guidelines. Metgasco also believes the suspension action was not within the Government’s rights and that, even if it had been, the proper process was not observed.

The company has begun legal action in the NSW Supreme Court.