Metgasco gets $25m buyout offer

Metgasco announced this morning its board of directors had approved the $25m offer, which also requires Metgasco to drop its legal action against the government.

The offer will be presented to shareholders at a meeting expected to be held in late December.

In May 2014 NSW Resources Minister Anthony Roberts suspended Metgasco’s drilling operations. He cited lack of public consultation as a breach of its licence conditions. Metgasco challenged the decision.

In April this year the Supreme Court overturned the state government’s suspension of Metgasco’s licence and the company said it would seek a substantial payout.

While negotiations dragged on, Metgasco said in September that it would restart its drilling program at Bentley, near Lismore.

Legal and exploration action will be suspended pending the general meeting.

The Bentley site had been blockaded by up to 2000 people for several months in 2014. The government warned it would send bus loads of police to break the blockade before it ultimately halted drilling.

In May the company said it had spent more than $120 million in the previous 10 years developing its Northern NSW gas fields.

Metgasco holds petroleum licences 13, 16 and 426 and petroleum production licence 9.

Metgasco chairman Len Gill said the potential payout from court action could be significant, but risked further delay and an uncertain outcome.

The company needed to seek alternatives, he said.

"While the identified gas resources could have a significant value if developed in an efficient and timely manner, the board has to consider the risks associated with ongoing project approval delays, higher costs and difficulties funding activities over the next few years," Mr Gill said.

Gasfield Free Northern Rivers coordinator Elly Bird welcomed the announcement.

“We’re over the moon that the government and the company have finally seen the light and decided that the community’s rejection of unconventional gas could not be overcome."