Metgasco Limited: Successful Odin-2 Drilling and Quarterly Revenue Update - 31 July 2024
METGASCO LTD (MEL) Share Update July 2024 Wednesday 31st
Metgasco Announces Successful Odin-2 Drilling and Revenue Update
Metgasco Limited (ASX: MEL) has announced the successful drilling of the Odin-2 well, which confirmed gas pay in all primary target formations. The company also reported its quarterly activities and revenue for the quarter ended 30 June 2024.
Instant Summary:
- Odin-2 drilling confirmed gas pay in all primary target formations.
- Odin-2 well cased and suspended for future gas production expected in September 2024.
- Odin-1 gas production averaged 1.89 MMscfd during the quarter.
- Vali-1 gas production averaged 1.50 MMscfd during the quarter.
- Sales revenue of approximately $540,000 for the quarter.
- FY24 sales revenue totals approximately $2.57 million.
- Successful capital raising of $925,000 through share placement and $743,500 through share purchase plan.
Odin-2 Drilling Success
Metgasco Limited reported a significant achievement with the successful drilling of the Odin-2 well. Wireline logging confirmed gas pay in all primary target formations, leading to the well being cased and suspended for future gas production. The production from Odin-2 is now anticipated to commence in September 2024, slightly delayed due to heavy rainfall affecting road access.
Odin-1, an existing well, produced an average of 1.89 million standard cubic feet per day (MMscfd) of raw gas during the quarter. Production optimization work for Odin-1 is scheduled to begin in August, weather permitting.
Vali Gas Field Update
The Vali-1 well also contributed to Metgasco's production, averaging 1.50 MMscfd of raw gas during the quarter. However, operations to restart gas flow on Vali-2 have been deferred to August due to weather-related road access issues.
Revenue and Sales
Metgasco reported sales revenue of approximately $540,000 for the quarter, a 19% decrease from the previous quarter's revenue of $670,000. The drop in revenue is attributed to lower gas production and the timing of LPG liftings. Despite this, the company achieved a total FY24 sales revenue of approximately $2.57 million.
Corporate Activities
In early May, Metgasco completed a share placement to raise $925,000 before costs, targeting eligible and sophisticated shareholders and institutional investors. Additionally, a share purchase plan (SPP) raised $743,500 before costs, with the capital intended to fund the Odin-2 project.
Metgasco's Managing Director, Ken Aitken, expressed gratitude to shareholders and investors for their support, highlighting the successful drilling result at Odin-2 as a key achievement for the quarter.
The successful drilling of Odin-2 and the confirmation of gas pay in all primary target formations are positive developments for Metgasco. These achievements are expected to enhance the company's production capabilities and revenue generation in the coming months. However, the delay in production commencement due to weather conditions may slightly temper immediate investor enthusiasm.
The reported decrease in quarterly revenue, while notable, is offset by the overall strong performance for FY24. The successful capital raising efforts demonstrate investor confidence in Metgasco's strategic direction and operational capabilities.
Investor Reaction:
Analysts are likely to view the successful Odin-2 drilling and the company's ability to raise significant capital positively. However, the decrease in quarterly revenue and the delays caused by weather conditions may prompt a cautious approach among some investors. Overall, the long-term outlook remains optimistic, with the potential for increased production and revenue in the near future.
Conclusion:
Metgasco's successful Odin-2 drilling and robust FY24 revenue performance highlight the company's operational strengths and strategic direction. Investors should monitor the commencement of production from Odin-2 and the ongoing optimization efforts at Odin-1 and Vali-2. Continued support from shareholders and strategic capital raising initiatives position Metgasco well for future growth.