COMET RIDGE LIMITED ASX Announcement
31 July 2020
June 2020 Quarterly Activities Report & Appendix 5B
Mahalo North (ATP 2048) - (Comet Ridge 100%)
ATP 2048 Update
At the end of April 2020, Comet Ridge Limited (ASX:COI) announced it had formally met the condi�ons for award of the Authority to Prospect No 2048 (ATP 2048) and had been awarded the block by Queensland's Department of Natural Resources, Mines and Energy (DNRME).
The award of the block to Comet Ridge as 100% equity holder followed the Environmental Authority (EA) approval from the Department of Environment and Science and formal execu�on of a Na�ve Title
Agreement over the block.
This is the first block the Company has held that is close to infrastructure and with 100% equity.
The block is also large and highly prospec�ve, given it sits just north of the Mahalo JV area where Comet Ridge is a 40% equity holder and has a deep geologic understanding and a significant amount of geological data.
Figure 1 details the CSG Fairway running up into the Mahalo North block from Mahalo.
Figure 1 - Map of the CSG Fairway running from | ||
Mahalo into the Mahalo North acreage | ||
Level 3, 410 Queen Street | ||
Brisbane Queensland 4000 | ||
A compelling east coast gas play | GPO Box 798 Brisbane Qld 4001 | |
Phone +61 7 3221 3661 | ||
Comet Ridge Limited | ABN 47 106 092 577 | ASX: COI | Email: comet@cometridge.com.au | |
cometridge.com.au |
Recently integrated (addi�onal) third party, high quality, seismic data has increased our confidence in the produc�ve coal fairway and the ability of strategically placed pilots to deliver meaningful gas volumes. The high quality of the newly obtained seismic data means it is likely that a further planned seismic survey will not be necessary and that appraisal and ini�al development wells can be located based on the data already available and interpreted.
Based on the extensive data set within the Mahalo Gas Project, Comet Ridge has modelled that a dual lateral well in this fairway could flow in the range of 2 to 3 TJ/d. This is consistent with observed well performance from both Mahalo 7 and Mira 6 lateral wells and will be refined following tes�ng of the ini�al Mahalo North pilot wells. Both the Mahalo 7 and Mira 6 lateral wells at Mahalo, although drilled in the same highly prospec�ve fairway at the same depth range, were significantly shorter wells than are currently planned for Mahalo North (361m and 924m actual "in-coal" lateral lengths versus 1500m to 1800m planned lateral lengths for new wells).
Modelling of Mahalo North produc�on suggests that the block has the poten�al to deliver up to approximately 20 TJ/d, which at 100% equity provides a very meaningful gas sales volume in addi�on to Comet Ridge's 40% share of planned produc�on from the Mahalo Gas Project.
A number of par�es have expressed an interest in purchasing gas from Mahalo North, which has a domes�c market requirement. Whilst COVID-19 has restricted the Company's ability to conduct field work, Comet Ridge is progressing op�ons for pilot appraisal and development funding, gas transporta�on and gas sales.
Exis�ng infrastructure near to Mahalo North, as well as the poten�al to supply gas to subs�tute diesel at nearby coal mines, provides for a staged development profile and early produc�on from Mahalo North. Figure 2 (below) shows the loca�on of Mahalo North to nearby coal mines and the Greater Mahalo Development Area.
At the end of the quarter, Comet Ridge made an applica�on to Queensland Government for a Petroleum Survey Licence (PSL) for the Greater Mahalo Development Area. When granted, this will permit the Company to beter locate gas facili�es, flowlines and pipelines.
Figure 2 - Map of Greater Mahalo Development Area with Comet Ridge's 100% Mahalo
North & 40% Mahalo Gas Project
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Mahalo (PL 1082 and 1083) - (Comet Ridge 40%)
Significant Government Approvals Achieved
While the Company's recent focus has been primarily on Mahalo North, over the course of the June quarter the Mahalo Joint Venture received three key government approvals for the Mahalo Gas Project. These were:
- The Department of Agriculture, Water and the Environment approval under the Commonwealth Government Environment Protection and Biodiversity Conservation Act (EPBC). This was the first of two environmental steps required for the project to move forward to production.
- Approximately one month later, the Queensland Department of Environment and Science gave its environmental approval for the Mahalo Gas Project.
- Finally, at the end of the quarter, the Queensland DNRME granted Queensland Petroleum Leases (PLs) 1082 ("Humboldt") and 1083 ("Mahalo") for a term of 30 years. These Petroleum Lease awards are the final joint venture regulatory approval required for the project to move forward to produc�on.
The Mahalo Gas Project is held 40% by Comet Ridge, 30% by Santos (ASX:STO) and 30% by APLNG (where Origin Energy (ASX:ORG) is the development Operator) and is located in Figure 2 (above). The Joint Venture par�cipants have undertaken many years of explora�on, appraisal and development planning ac�vi�es to prove up Mahalo as a valuable development-ready gas project and the Company is very pleased full regulatory approval has been received. Comet Ridge is now able to realise full value for the asset.
Galilee Basin, Qld - ATP 743, 744 & 1015
(Comet Ridge 100% in "Shallows", 70% in "Deeps")
Albany Drilling Campaign
Since the decision to demobilise, COVID-19 developments have caused Comet Ridge to suspend the planning of field opera�ons in the Galilee Basin, to ensure the safety and well-being of employees and contractors. This includes any further s�mula�on tes�ng at Albany. The Company's short-term focus remains on bringing Mahalo North (100% equity) on-line as quickly as possible, to achieve a posi�ve revenue stream. Planning of future evalua�on and appraisal ac�vi�es for both of the Company's assets (100% in shallow coals from the Bets Creek Forma�on and 70% JV in the Deeps for the Lake Galilee Sandstone conven�onal targets) in the Galilee Basin con�nues - see Figure 3.
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Figure 3 - Comet Ridge extensive Galilee Basin posi�on in both "Shallows" for coal targets and "Deeps" for conven�onal targets
A number of invoices rela�ng to Albany 2 and Albany 1 side-track drilling, s�mula�on and nitrogen li�ing costs were paid in the early part of the June quarter to finalise the field programme that ran from 3Q 2019 to 1Q 2020. All Galilee costs from 2019 and early 2020 are now fully paid, including all equipment demobilisa�on charges.
Corporate Activities
Management Change
In support of the Company's sharpened drive for efficiency, and par�cular focus on the 100% held and newly awarded Mahalo North block (ATP 2048), the board decided that the CFO role is more cost effec�vely filled on a part-�me rather than full �me basis. Subsequently, Mr Peter Harding-Smith le� the Company, effec�ve 22 May 2020.
The Company subsequently announced the appointment of Mr Phil Hicks as Chief Financial Officer, effec�ve 1 July 2020. Mr Hicks is a qualified Chartered Accountant with significant capital markets, corporate and project finance experience. He has worked across the resources sector in many areas including M&A, strategy, financing and investor rela�ons. A�er comple�ng a Bachelor of Business (Accoun�ng) degree, and later a Graduate Diploma of Applied Finance and Investment, Mr Hicks commenced his career with KPMG in an audit role. He later worked for Ernst & Young before spending 13 years at Wilson HTM where he became Head of Corporate Finance. In 2012, he co-founded Integra Advisory Partners Pty Ltd and has been an advisor and consultant to ASX listed companies, including Comet Ridge. The appointment of Mr Hicks as CFO is on a part-�me contract basis.
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Research and Development Tax Incen�ve Refund
The Company made an 'advanced finding' applica�on to AusIndustry to confirm the drilling and tes�ng ac�vi�es undertaken in rela�on to Albany 1 in the Galilee basin are eligible core and suppor�ng research and development ac�vi�es; as defined in the Income Tax Assessment Act 1997 (Cth). The Company received a favourable finding in June 2020, confirming its eligibility to receive a refundable R&D tax offset for costs incurred on these ac�vi�es conducted in the 2018, 2019 and 2020 financial years. Comet Ridge expects to receive a refund in the September quarter of approximately $1.1 million net of costs for the 2018 and 2019 years. An applica�on for the 2020 financial year will also be made in the coming months and a further refund may be received in the December quarter.
Cash Posi�on
As at 30 June 2020, Comet Ridge had $4.636m cash on hand (un-audited).
As outlined above, the cash balance at 30 June 2020 was impacted by the finalisa�on of all contractor payments for the Galilee Deeps program (COI 70% share) at the beginning of the June quarter. With a significantly reduced explora�on and evalua�on spend planned for future quarters, project funding ini�a�ves, expected R&D refunds and expenditure reduc�ons announced on 31 March 2020, the Company has a cash runway late into 2021.
Payments to Related Par�es
The aggregate amount of payments to related par�es and their associates of $165k for the June quarter (shown in item 6.1 of the atached Quarterly Cashflow Report) relates to cash fees paid to Directors (including the Managing Director).
Shares and Performance Rights Posi�on
No shares were issued during the quarter, with the total number of shares on issue at 30 June 2020 of 789,000,030. The Company also has 4,100,000 performance rights on issue at 30 June 2020.
By Authority of Board per: Tor McCaul, Managing Director
For more informa�on or photos:
Tor McCaul | Phil Hicks |
Managing Director | Chief Financial Officer |
Phone +61 7 3221 3661 | Phone +61 7 3221 3661 |
tor.mccaul@cometridge.com.au | phil.hicks@cometridge.com.au |
About Comet Ridge
Comet Ridge Limited (ASX: COI) is a publicly-listed Australian energy company focused on the development of gas resources for the east coast Australian market. The company has tenement interests and a suite of prospec�ve projects in Queensland and New South Wales. Our flagship Mahalo and Mahalo North projects are low cost, sales spec gas plays close to Gladstone. Our explora�on assets in the Galilee and Gunnedah basins offer further upside amid increasing domes�c and interna�onal demand for gas as a source of cleaner energy.
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Appendix 5B
Mining exploration entity or oil and gas exploration entity quarterly cash flow report
Rule 5.5
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
COMET RIDGE LIMITED
ABN | Quarter ended ("current quarter") | ||||||
47 106 092 577 | 30 June 2020 | ||||||
Consolidated statement of cash flows | Current quarter | Year to date | |||||
(12 months) | |||||||
$A'000 | $A'000 | ||||||
1. | Cash flows from operating activities | ||||||
1.1 | Receipts from customers | - | - | ||||
1.2 | Payments for: | ||||||
(a) | exploration & evaluation | (3) | (20) | ||||
(b) | development | - | - | ||||
(c) | production | - | - | ||||
(d) | staff costs | (144) | (1,001) | ||||
(e) administration and corporate costs | (451) | (1,668) | |||||
1.3 | Dividends received (see note 3) | - | - | ||||
1.4 | Interest received | 46 | 125 | ||||
1.5 | Interest and other costs of finance paid | - | - | ||||
1.6 | Income taxes paid | - | - | ||||
1.7 | Government grants and tax incentives | - | - | ||||
1.8 | Other - JV recoveries | 381 | - | ||||
1.9 | Net cash from / (used in) operating activities | (171) | (2,564) | ||||
2. | Cash flows from investing activities | ||||||
2.1 | Payments to acquire or for: | ||||||
(a) | entities | - | - | ||||
(b) | tenements | - | - | ||||
(c) property, plant and equipment | (2) | (13) | |||||
(d) | exploration & evaluation | (4,172) | (16,873) | ||||
(e) | investments | - | - | ||||
(f) other non-current assets | - | - | |||||
2.2 | Proceeds from the disposal of: | ||||||
(a) | entities | - | - | ||||
(b) | tenements | - | - | ||||
(c) property, plant and equipment | - | - | |||||
(d) | investments | - | - | ||||
(e) other non-current assets | - | - | |||||
2.3 | Cash flows from loans to other entities | - | - | ||||
2.4 | Dividends received (see note 3) | - | - | ||||
2.5 | Other (Restricted cash term deposits) | - | (2) | ||||
2.6 | Net cash from / (used in) investing activities | (4,174) | (16,888) | ||||
ASX Listing Rules Appendix 5B (17/07/20) | 1 |
+ See chapter 19 of the ASX Listing Rules for defined terms |
Appendix 5B
Mining exploration entity or oil and gas exploration entity quarterly cash flow report
Consolidated statement of cash flows | Current quarter | Year to date | |
(12 months) | |||
$A'000 | $A'000 | ||
3. | Cash flows from financing activities | ||
3.1 | Proceeds from issues of equity securities (excluding convertible debt securities) | ||
- | 11,614 | ||
3.2 | Proceeds from issue of convertible debt securities | - | - |
3.3 | Proceeds from exercise of options | - | - |
3.4 | Transaction costs related to issues of equity securities or convertible debt | ||
securities | - | (524) | |
3.5 | Proceeds from borrowings | - | - |
3.6 | Repayment of borrowings | - | - |
3.7 | Transaction costs related to loans and borrowings | - | - |
3.8 | Dividends paid | - | - |
3.9 | Other (provide details if material) | - | - |
3.10 | Net cash from / (used in) financing activities | - | 11,090 |
4. | Net increase / (decrease) in cash and cash equivalents for the | ||
period | |||
4.1 | Cash and cash equivalents at beginning of period | 8,981 | 12,998 |
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (171) | (2,564) |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (4,174) | (16,888) |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | - | 11,090 |
4.5 | Effect of movement in exchange rates on cash held | - | - |
4.6 | Cash and cash equivalents at end of period | 4,636 | 4,636 |
5. | Reconciliation of cash and cash equivalents | Current quarter | Previous quarter |
at the end of the quarter (as shown in the consolidated statement of cash flows) | |||
$A'000 | $A'000 | ||
to the related items in the accounts | |||
5.1 | Bank balances | 4,636 | 8,981 |
5.2 | Call Deposits | - | - |
5.3 | Bank overdrafts | - | - |
5.4 | Other (provide details) | - | - |
5.5 | Cash and cash equivalents at end of quarter (should equal item | ||
4.6 above) | 4,636 | 8,981 | |
6. | Payments to related parties of the entity and their associates | Current quarter | |
$A'000 | |||
6.1 | Aggregate amount of payments to related parties and their associates included in | ||
item 1 | 165 | ||
6.2 | Aggregate amount of payments to related parties and their associates included in | ||
item 2 | - | ||
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.
7. | Financing facilities | Total facility amount | Amount drawn at |
at quarter end | quarter end | ||
Note: the term "facility" includes all forms of financing arrangements available to the entity. | $A'000 | $A'000 | |
Add notes as necessary for an understanding of the source of finance available to the | |||
entity. | |||
7.1 | Loan facilities | ||
7.2 | Credit standby arrangements | ||
7.3 | Other (please specify) | ||
7.4 | Total financing facilities | ||
7.5 | Unused financing facilities available at quarter end | ||
7.6 | Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is | ||
secured or unsecured. If any additional financing facilities have not been enterested into or are proposed to be entered into | |||
after the quarter end, include a note providing details of those facilities as well. | |||
ASX Listing Rules Appendix 5B (17/07/20) | 2 |
+ See chapter 19 of the ASX Listing Rules for defined terms |
Appendix 5B
Mining exploration entity or oil and gas exploration entity quarterly cash flow report
8. | Estimated cash available for future operating activities | $A'000 |
8.1 | Net cash from / (used in) operating activities (item 1.9) | (171) |
8.2 (Payments for exploration & evaluation classified as investing activities) (item
2.1(d)) | (4,172) | |
8.3 | Total relevant outgoings (item 8.1 + item 8.2) | |
(4,343) | ||
8.4 | Cash and cash equivalents at quarter end (item 4.6) | 4,636 |
8.5 | Unused finance facilities available at quarter end (item 7.5) | - |
8.6 | Total available funding (item 8.4 + item 8.5) | 4,636 |
8.7 Estimated quarters of funding available (item 8.6 divided by item
8.3) | 1.1 |
Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as "N/A". Otherwise a figure for the estimated quarters of funding available must be included in item 8.7.
8.8 If item 8.7 is less than 2 quarters, please provide answers to the following questions:
8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows from the time being and, if not, why not?
Answer:
No. The net operating cash flows of the Company for future quarters will be significantly lower compared to the quarter ended 30 June 2020. Of the $4,172k capitalised exploration & evaluation expenditure included in item 8.2 above, $3,547k related to the finalisation of the Galilee Deeps work program in ATP744. Expenditure for this project for future quarters will be reduced to tenure management activities. As announced to ASX on 31 March 2020, the Company has made reductions to its staff and contractor costs as well as agreeing to pay directors in equity rather than cash (subject to shareholder approval) from the commencement of the June 2020 quarter.
8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
Answer:
No. The Company has no plans to raise further cash for the reasons outlined in question 8.8.1 above. The Company also expects to receive a Research & Development Tax Incentive refund relating to expenditure on the Galilee Deeps exploration program for the 2018 and 2019 financial years of approximately $1.1 million (net of costs) during the September 2020 quarter. A further refund for the 2020 financial year may be received in the December 2020 quarter.
8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?
Answer:
Yes. The Company is able to continue its operations and meet its business objectives based on its current cash balance and for the reasons outlined in 8.8.1 and 8.8.2 above.
Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.
Compliance statement
1. This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2.
This statement gives a true and fair view of the matters disclosed.
Date: 31-07-20
Authorised by: ____________________________________________
By the Authority of the Board
Print Name: Stephen Rodgers
Company Secretary
Notes
- This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encourages to do so.
- If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
- Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
ASX Listing Rules Appendix 5B (17/07/20) | 3 |
+ See chapter 19 of the ASX Listing Rules for defined terms |
Appendix 5B
Mining exploration entity or oil and gas exploration entity quarterly cash flow report
-
If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been
authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg
Audit and Risk Committee] ". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee". - If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
ASX Listing Rules Appendix 5B (17/07/20) | 4 |
+ See chapter 19 of the ASX Listing Rules for defined terms |
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Comet Ridge Limited published this content on 31 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2020 01:25:09 UTC
