Sydney Gas shareholders have once again been asked to cough up some cash in order to secure the company's future.
The request was made by company chairman Dominic Martino, who assured shareholders of success, saying the company's $3 million in annual revenue now would soar to $30-$35 million by the end of calendar 2003 or early in the first quarter of 2004. Martino is trying to raise $20m in funds from the shareholders.
The fund raising solutions were approved at the meeting and a placement to US and UK investors in early May at 28c a share, a 10% discount, has already raised $5.3 million.
Martino declined to provide a capital cost but said more funding would be needed as the company completed a 100-well drilling program.
Sydney Gas continues to lose money. In the three months to March 31 this year the company pulled in just $614,000 in cash from customers while expenses ran at $4.8 million. That compared with $295,000 in receipts in the previous quarter and $3.6 million in costs.
However, the company predicts a future that would put it in the top handful of Australian producers, based on gas-in-place reserves of around 63 trillion cubic feet (TCF) within its acreage.
It says recovery factors of 90% have been seen in some high permeability gas fields in the US. Even at a gas recovery rate of between 30% and 50%. potential gas recovery ranges from 19 TCF to 32 TCF, provided that the geological model is consistent across the Sydney Basin.
