Metgasco’s latest quarterly report reveals a 24% drop in sales revenue amid ongoing Production Uplift Program activities, while reserves remain stable and strategic farm-out talks advance.
- 24% decline in quarterly sales revenue to $451,400
- Production Uplift Program identifies and treats scale in Odin wells
- Vali field phase two uplift activities ongoing with promising early results
- Proved and probable reserves steady at 3.1 MMboe and 6.24 MMboe respectively
- Cash balance falls to $562,000; total debt rises to $5.87 million
Production and Operational Update
Metgasco Limited’s September quarter report highlights a challenging period for its Odin and Vali gas fields, with sales revenue falling 24% to $451,400 compared to the previous quarter. This decline primarily reflects lower gas production, which was disrupted by the ongoing Production Uplift Program (PUP) aimed at addressing scale accumulation in the wells.
The PUP, initiated in July, confirmed the presence of scale in the Odin-1 and Odin-2 wells, which was treated chemically to improve flow. While production improvements were modest relative to prior interventions, the program validated the need for ongoing scale management. At Vali, phase two of the uplift program began in late September and remains underway, with early signs of success as Vali-2 was brought back online post-quarter, showing encouraging gas flow after dewatering efforts.
Reserves and Exploration Prospects
Despite production setbacks, Metgasco’s proved (1P) and proved plus probable (2P) reserves remain largely unchanged at 3.1 million barrels of oil equivalent (MMboe) and 6.24 MMboe respectively. Sales gas reserves constitute the vast majority of these figures, with over 30 petajoules of gas estimated as uncontracted, underscoring potential for future sales growth.
Exploration efforts continue in the ATP2021 permit area, where the joint venture has identified the Altar prospect as a promising dual oil and gas target. Farm-out discussions are underway to secure funding for drilling and additional seismic surveys, signaling a strategic push to unlock new resources beyond current production.
Financial Position and Strategic Outlook
Metgasco’s cash position declined to $562,000 by quarter-end, down from $1.12 million, reflecting increased development expenditure related to the PUP and a final milestone payment to Beach Energy for an additional interest in the Odin field. The company’s total debt rose to $5.87 million, comprising secured and unsecured loans from Glennon Small Companies Ltd, with ongoing discussions about refinancing options to improve liquidity.
Managing Director Ken Aitken emphasized the company’s focus on completing the Production Uplift Program and advancing farm-out opportunities to strengthen the balance sheet. The strategic review with corporate advisors PAC Partners continues, aiming to position Metgasco for operational and financial resilience in the coming quarters.
Looking Ahead
With the Production Uplift Program’s second phase at Vali still in progress and farm-out negotiations underway, the December quarter will be pivotal for Metgasco. Investors will be watching closely for production recovery signals and the company’s ability to secure additional funding to support its development and exploration ambitions.
Bottom Line?
Metgasco’s near-term performance hinges on successful completion of production enhancements and strategic funding moves.
Questions in the middle?
- Will the Production Uplift Program deliver sustained production gains at Vali and Odin?
- How will farm-out discussions for the Altar prospect impact Metgasco’s exploration funding and valuation?
- What refinancing solutions will Metgasco pursue to manage its $5.87 million debt burden?