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METGASCO LTD
AND THE ENTITY IT CONTROLLED
ACN 088 196 383
CONSOLIDATED FINANCIAL REPORT
HALF YEAR ENDED
31 DECEMBER 2021
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METGASCO LTD - CONSOLIDATED FINANCIAL REPORT
HALF YEAR ENDED 31 DECEMBER 2021
CONTENTS | Page |
Directors' Report | 3 |
Auditor's Independence Declaration | 12 |
Consolidated Statement of Profit or Loss and Other Comprehensive Income | 13 |
Consolidated Statement of Financial Position | 14 |
Consolidated Statement of Cash Flows | 15 |
Consolidated Statement of Changes in Equity | 16 |
Notes to the Consolidated Financial Statements | 17 |
Declaration by Directors | 24 |
Independent Auditor's Review Report | 25 |
Corporate Directory | 27 |
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METGASCO LTD - CONSOLIDATED FINANCIAL REPORT
HALF YEAR ENDED 31 DECEMBER 2021
DIRECTORS' REPORT
Your Directors present their report together with the consolidated financial statements of Metgasco Ltd ("Metgasco" or "Company") and its controlled entity (collectively referred to as "the Group") for the half year ended 31 December 2021.
Directors
The names of persons who were Directors of Metgasco at any time during the half year and up to the date of this report are as follows:
Mr Philip Amery - Non-Executive Director, Chairman
Mr Ken Aitken - Managing Director (appointed 26 July 2021)
Mr John Patton - Non-Executive Director
Mr Robbert Willink - Non-Executive Director
Mr Peter Lansom - Non-Executive Director (appointed 4 August 2021)
Principal Activities
Metgasco's principal activity is investment in the exploration, appraisal, development and commercialisation of oil and gas assets. The Group is also seeking additional investment opportunities.
Review of Operations
The following is an overview of the Company's activities during the half year ended 31 December 2021.
Cooper/Eromanga: ATP2021
ATP2021 is located in Queensland adjoining the Queensland- South Australia border. ATP2021 contains the Vali gas field, discovered by Vali ST1 in January 2020 and successfully appraised by Vali-2 and Vali-3 in the June and September quarters of CY2021 (see figure 1) . The field has three cased wells available for future gas production.
Following the successful results of Vali-2 decided to drill an additional appraisal well Vali-3. The Vali-3 well reached total depth at 3,186 metres on 28 June 2021, achieving its main objective of intersecting the Patchawarra Formation at a depth consistent with the pre-drill interpretation of the Vali structure. During drilling, gas shows were observed in the lower Nappamerri Group, Toolachee, Epsilon and Patchawarra formations, and the Tirrawarra Sandstone.
Oil shows were observed through the late Cretaceous, Jurassic and Triassic sediments, as well as the uppermost Permian aged Toolachee Formation. Similar shows were encountered in both the Vali-1 ST1 and Vali-2 wells and Metgasco considers these shows supportive of oil migration and hence potential oil accumulations within the ATP 2021 permit, where more than 12 oil leads have been identified.
The analysis of the Vali -3 wireline logging data resulted in the operator estimating a total of 165 metres of conventional and low permeability net gas pay within the Patchawarra Formation, which comprised 101 metres of conventional net gas pay (porosity equal to or greater than 8%) and 64 metres of unconventional net gas pay (porosities ranging from 6% to 8%). 13 metres of net gas
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pay was also identified in the deeper Tirrawarra Sandstone. Gas trapped in the unconventional sandstones will likely be accessed via well stimulation.
For comparison, the Patchawarra Formation in Vali-2 also has 101 metres of net gas pay in conventional sandstones, and 16 metres of unconventional net gas pay. The Epsilon and Toolachee formations within Vali-3 have been interpreted to contain potential gas pay, with further technical work required before this can be quantified.
The joint venture has reviewed the data from the successful Vali wells and sent the data to ERC Equipoise Pte Ltd in Q3 FY2021 to complete an independent Reserve certification for the Vali Field.
As a result of this evaluation, ERCE revised its 1P, 2P and 3P Reserves estimates for the Vali Field to include the Toolachee Formation, as well as revising upward the previously booked Reserves from the Patchawarra Formation. The effect of the revision has been a three-fold increase in 2P Reserve of the Vali field to 101.0 PJ (25.2PJ net to MEL) independently certified and booked (previously Gross 2P of 33.2PJ (8.3PJ net to MEL) The following tables detail the combined revised Reserves estimates.
Figure 1: Cooper Basin permits PRL 211 and ATP 2021 including well locations Odin-1,Vali-1 ST1,
Vali-2 and Vali-3 Source: Vintage
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Table 1&2 - Vali Field Gross and Net Reserves:
Gross ATP 2021 Vali Gas Field Reserves
1P | 2P | 3P | ||||
Sales Gas (Bcf) | 43.3 | 92.0 | 191.2 | |||
Sales Gas (PJ) | 47.5 | 101.0 | 209.8 | |||
Net Entitlement ATP 2021 Vali Gas Field Reserves | ||||||
1P | 2P | 3P | ||||
Sales Gas (Bcf) | 10.8 | 23.0 | 47.8 | |||
Sales Gas (PJ) | 11.9 | 25.2 | 52.4 |
- Reserves estimates reported here are ERCE estimates, effective 31 October 2021, first announced to the ASX 1 November 2021
- Metgasco is not aware of any new data or information that materially affects the Reserves above and considers that all material assumptions and technical parameters continue to apply and have not materially changed.
- Reserves estimates have been made and classified in accordance with the Society of Petroleum Engineers ("SPE") Petroleum Resources Management System ("PRMS") 2018.
- Company Net Entitlement Reserves are based on the Metgasco working interest share of 25% of the field gross Reserves and are prior to the deduction of royalties
- Sales Gas volumes are net of fuel and flare volumes.
- All quantities subject to rounding to one decimal place for clarity purpose.
On 6 December 2021 Metgasco announced that the ATP2021 Joint Venture parties entered into a conditional Heads of Agreement ("HoA") with AGL Wholesale Gas Limited ("AGL") for the sale of all gas produced from the Vali Field from field start-up (mid CY2022) through to the end of CY2026. This is anticipated to be a minimum of 9 PJ and up to 16 PJ of gross sales gas over the contract term, to be sold on a mix of firm and variable pricing at market rates.
The terms set out in the HoA will form the basis of a fully termed Gas Sales Agreement ("GSA") which will include AGL providing an upfront payment of $15 million to the JV in three tranches as the project moves to first gas, subject to execution of the GSA and satisfaction of its condition's precedent. The JV funds will be used specifically for the Vali Field to fund the work program, including the completion of all three Vali wells and the tie-in of the Vali Field to the nearby Moomba pipeline network.
The HoA includes a number of conditions precedent to a definitive GSA including a condition that a raw gas processing agreement with the Moomba infrastructure owners, for the processing of Vali gas to sales gas standards, is entered into. The HoA provides for an exclusivity period, during which time the formal documentation for a gas sales agreement is expected to be negotiated and executed
The ATP2021 Joint Venture(JV) made significant progress on the remaining catalysts to enable a JV decision on the appraisal of, and production from the Vali field. These catalysts are;
- Agreeing a processing tariff with the Moomba infrastructure owners
- Complete detailed engineering on an appropriately sized pipeline to connect the Vali wells to the Moomba infrastructure
Metgasco anticipate that the consideration of the field appraisal program by the ATP 2021 JV will occur in Q1 CY2022 leading to a circa 30+ year Vali production hub starting production in mid CY2022 providing inaugural gas revenue to the business.
ATP 2021 has further oil and gas prospectivity. Seismic acquisition and interpretation are required to identify optimal locations. Planning for seismic acquisition is to be conducted in the second half of the current financial year.
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