Metgasco said its shareholders risk losses of $18 million, hitting out at the NSW government’s decision to suspend its drilling licence just days before the program was set to commence near Lismore.
NSW Resources and Energy Minister Anthony Roberts suspended Metgasco’s Rosella-E-01 exploration well last week and said the company would need to prove it has undertaken "genuine and effective consultation" with the community.
Metgasco said the decision by the Office of Coal Seam Gas to suspend the licence “without notice or justification” represents an “extraordinary breach of process”.
“It is damaging to our reputation, shareholder value and the confidence of investment markets in New South Wales,” Metgasco chairman Len Gill said.
In a letter to shareholders, Gill said the suspension came as a complete surprise to the company, who had mobilised equipment and workers, with plans to start drilling the Rosella exploration site just days after the decision was handed down.
He said the suspension would result in a direct loss of $3 million.
Gill said the company has undertaken an extensive consultation program that is “fully compliant with the licence requirement”.
He said at a minimum, the company should have been asked to show cause or be questioned about the complaint which lead the suspension.
“Instead there has been no process, no opportunity for explanation or correction; rather a summary denial of natural justice,” Gill said.
The company said it had made direct representations to the New South Wales Premier, Mike Baird, to express its concern and to seek an immediate review of the decision to suspend drilling.
It has also asked that the OCSG suspend its current review of the licence as “we consider its actions to be unlawful”.
Metgasco said it provided a submission to the Office of Coal Seam Gas last Thursday demonstrating that it had “fully complied with licence conditions relating to community consultation”.
While a decision was expected on Monday, the office advised its evaluation is not yet complete, and was unable to confirm a date for its response.
Shares in Metgasco have almost halved since the suspension, and Gill warned investors risked losses of around $18 million.
In announcing his decision to suspend the drilling program, Roberts also revealed he had referred the company’s PEL 16 exploration licence to the Independent Commission Against Corruption.
Gill said while Metgasco is a strong supporter of ICAC, he questioned the need to publicly announce a referral had been made.
“The announcement has the potential to interfere with ICAC’s processes and, from our perspective, has caused severe damage to our reputation before ICAC has even been able to consider the referral and before we have had a chance to respond,” Gill said.
“It is difficult to see how the public announcement was just treatment of Metgasco.”
Metgasco said it remains committed to the gas resources in Northern Rivers region, noting that it had drilled over 50 wells in the area over the past ten years.