Metgasco Limited reported a modest quarterly profit supported by steady gas production from its Odin and Vali fields, while approving a production uplift program to boost future output. Despite challenges including flooding delays and lower LPG sales, the company secured a six-year licence renewal, positioning it for growth in the Cooper Basin.
- Quarterly profit of $74,000 driven by Odin and Vali gas production
- Production declines moderated by surface pressure debottlenecking and metering fixes
- Joint venture approved low-cost production uplift program for all wells
- Sales revenue declined 18% quarter-on-quarter to $618,200 due to lower gas and LPG volumes
- ATP2021 licence renewed for six years, enabling further exploration and development
Steady Production Supports Modest Profit
Metgasco Limited (ASX:MEL) has reported a modest profit of $74,000 for the March 2025 quarter (Q3 FY25), underpinned by gas production from its Odin and Vali fields in the Cooper Basin. Despite a slight decline in production volumes compared to the previous quarter, operational improvements helped moderate output declines and sustain revenue generation.
The Odin gas field averaged 2.73 million standard cubic feet per day (MMscfd) of raw gas, while Vali produced 0.81 MMscfd during the quarter. Production declines from both fields were mitigated by surface pressure debottlenecking initiatives and the resolution of previously reported gas metering issues, which had been under-reporting volumes.
Production Uplift Program Approved but Delayed
The joint venture partners have approved a low-cost production uplift program targeting all Odin and Vali wells. This program includes well interventions such as initiating production from additional formations, scale remediation, and reperforation to enhance gas flow. However, implementation has been delayed due to flooding and road access issues in the Cooper Basin, pushing the start into the June 2025 quarter.
Metgasco’s Managing Director Ken Aitken highlighted the potential benefits of this program, noting it is expected to increase production, sales, and cash flow, thereby improving profit margins. The company remains focused on optimising production and controlling costs amid these operational challenges.
Revenue and Production Trends
Sales revenue for Q3 FY25 was $618,200, down 18% from $753,200 in the prior quarter. The decline was primarily due to lower gas production and the absence of LPG liftings during the period. Total production was 0.055 petajoule equivalent (PJe), an 8% decrease quarter-on-quarter, mainly reflecting reduced output from the Odin-2 well which came online in the previous quarter.
Despite these declines, Metgasco continues to supply gas under long-term contracts to blue-chip customers including Pelican Point Power and AGL Energy, supporting stable cash flows. The company’s cash balance stood at $456,214 at quarter-end, while total debt increased slightly to $5.513 million due to accrued interest on existing loan facilities.
Licence Renewal Secures Future Development
Following the quarter, Metgasco announced the renewal of its ATP2021 licence for six years, commencing June 2024. This renewal secures access to a permit area rich with exploration potential, including 23 oil prospects and 3 gas prospects. The licence extension provides the joint venture with the runway to advance appraisal and development activities, leveraging existing infrastructure to rapidly commercialise discoveries.
Conversely, Metgasco’s PRL237 exploration licence was surrendered earlier in the quarter after a review concluded insufficient prospectivity to justify further drilling.
Strategic Review and Financial Position
Metgasco continues a strategic review of its business with corporate advisors PAC Partners, exploring options to enhance shareholder value. The company is managing its debt facilities carefully, with a $2 million secured loan and $3.18 million in unsecured loans accruing interest. Shareholder approval may be sought to convert some debt to equity, potentially impacting capital structure.
Operationally, Metgasco is focused on executing the production uplift program and optimising existing assets to improve cash flow and profitability. The company’s transition from explorer to producer is underway, but challenges such as weather disruptions and production constraints remain key considerations.
Bottom Line?
Metgasco’s upcoming production uplift program and licence renewal set the stage for potential growth, but execution risks and financial pressures warrant close investor attention.
Questions in the middle?
- How will flooding delays impact the timing and scale of the production uplift program?
- What are the prospects and timelines for bringing Vali-2 and Vali-3 wells back online?
- Could debt-to-equity conversion materially alter Metgasco’s capital structure and shareholder dilution?