The company reported a strong performance over the past 12 months with chief executive Bruce Butcher declaring Sydney Gas would soon be operationally cashflow-positive for the first time ever. But a small group of residents from Wyong Shire’s rural communities who had become shareholders attacked the board over the Wyong Gas Project.
Shareholders accused the board of misinforming the community about the intended number of wells planned to be drilled in Wyong and criticised the general lack of consultation with the Wyong Shire and the proximity of the proposed plant to densely populated communities. They also said the project could affect local water tables and water quality.
Butcher said much of the criticism was simply “scaremongering”. He said Sydney Gas was committed to the project and plans were in place to construct the Wyong gas plant in 2006.
The company is currently working on gas projects in the Camden, Hunter Valley and Wyong regions.
Sydney Gas currently has a 20-well drilling program near Camden on Elizabeth Macarthur Agricultural Institute land. EM-13 reached total depth on 27 November, intersecting two coal seams, while EM-10 spudded today. It is intended to intersect the Bulli coal seam at about 592m and to reach a total depth of about 657m.
The 20 EM production wells will eventually be tied in with 40 other wells already drilled and completed into the gas gathering system for the Camden plant for sale to AGL Wholesale Gas under a $450 million sales contract.
The gas plant in the Camden region would be commissioned by December 31 and would be able to meet about 10% per cent of current NSW demand, Butcher said.
"This has been a very good year for Sydney Gas," he said.
Market capitalisation had steadily increased over the past 12 months from about $140 million to more than $250 million, according to Butcher.
"Once we are operationally cashflow-positive, we expect this upward growth to continue," he said.
"We are committed to proving up large reserves across the Sydney Basin. Acceptance [of Sydney Gas operations] will continue to grow, so too will the share price."
Butcher and Sydney Gas chairman Domenic Martino – a former Deloittes chief executive and board member of NewTel – would love to see the share prices rise. Their generous packages include large share option components.
Martino is paid $1.5 million, including 560,000 share options and a bonus of $300,000. Butcher is on a $1.9 million package with the same bonus and share options in addition to $80,950 non-monetary benefits and $45,000 in superannuation.
Some shareholders found these figures much more disturbing than any controversy associated with the Wyong project.
Shares in Sydney Gas closed down two cents to 98 cents on Tuesday but recovered to close at $1.01 on Wednesday.
