Magnum, which is now primarily focused on Botswana, has been unable to progress work in PELs 442, 444 and 454 for years, and so it and Apex have returned them to the government at a loss.
“The ongoing changes in the NSW regulatory environment and lack of a defined path forward to develop NSWs’ domestic gas resource, even after all the technical reviews and studies conclude that CSG can be developed safely, has driven Apex [Energy] and Magnum to reconsider the ongoing investment in these assets and to return the PELs to the NSW government,” managing director Trent Wheeler said.
Magnum secured its interest in NSW with its transformation from Golden Tiger Mining in 2010.
Under chairman Tom Fontaine, the then Ormil Energy believed the work done to that date by Apex on CSG and coal mine methane in active coal mining leases could springboard a new gas supply into the state, however Ormil and Apex swiftly became entangled in the state’s ever-evolving studies and bans on gas extraction.
Ormil eventually waved the white flag and merged with Magnum to pursue its African opportunities, while expressing the hope that the situation in NSW would settle down eventually.
Almost four years later it hasn’t, and Magnum is getting out – and worse, it is taking a loss on the deal for giving up its 20% interest in almost 280 square kilometres.
The government offered $212,500 per PEL, which Magnum described as “paltry”, given the millions of dollars that Magnum and Apex have invested in the acreage.
“Magnum was working to bring domestic gas to the NSW domestic energy market, farming into an existing reserve, close to infrastructure, in order to bring gas and power to a needing energy market,” Wheeler said.
“Development would have seen domestic gas production and power generation supporting and growing local industry, jobs and communities.
Apex recently took the view that the projects were no longer viable in the current situation, Magnum has co-operated with APEX in returning the PELs to the NSW government.
“Magnum is very disappointed that its shareholders have been disadvantaged, having suffered the loss of a viable proven resource due to the inability to progress the PELs as anticipated.”
He said Magnum would now pursue its gas and solar initiatives in Africa.
Apex no longer has any oil and gas interests.
Stop CSG Illawarra environmentalists are claiming victory over buybacks, which were in water catchment areas, four years after the group started up.
NSW Resources Minister Anthony Roberts described the Illawarra had been designated a special area where CSG exploration and development should not take place as the Sydney water catchment is “the most sensitive and important areas for securing our drinking water supply”
One licence remains in the catchment, PEL 2, which stretches from Sydney’s outer western suburbs from Campbelltown to the Hills District in the north.
Owner AGL Energy is reviewing its upstream gas business, and may eventually hand the large block back. It has owned PEL 2 for more than a decade and has drilled just three core wells.
The buyback period ends before the March 28 state poll.
