SGL General Information

Sydney Gas LTD (ABN: 93 003 324 310) is a small gas exploration company located in Sydney, NSW, Australia. The company produces coal bed (seam) methane gas (CBM or CSM) from 68 wells at Camdem (south of Sydney) in cooperation with AGL Wholesale Gas Ltd. SGL also runs an exploration program in the Hunter Valley. According Australian Business Register search (http://tinyurl.com/2f94zc ) the current business name was registered on 1 July, 2003 and their current business address is:

       Level 11, 1 O'Connell Street
       Sydney NSW 2000
       Australia

Further contact details may be obtained from SGL website ( http://www.sydneygas.com.au/home.php) and the contact page here. This is a typical website of an exploration company, lots of "great future" promotion targeting the investment community but it does contain useful information. For example a recent Analysts Briefing (8 May, 2007) review by Dr. Philip Moore ( retiring from his position from 1 June, 2007) provides a useful brief up-to-date technical summary of company activities. The Current News and News Archives sections summarize the official history of SGL as expressed in their reports to the Australian Stock Exchange.

Additional information can be obtained from ASIC search listing. Additional links to other independent investment advisers (such as InvestSMART) may be particularly enlightening.

Short History of SGL in the Hunter Valley

The early days of the Sydney Gas, when it traded as JAMLAKE N L or DESERTSTONE are shrouded in mystery.

1999.

The Annual Report for Year ended 30 June, 1999, archived on the internet, shows that the company, under the chairmanship of Domenic V Martino dropped some more colourful interests. Overboard went: GIBB ROCK PROJECT, WESTERN AUSTRALIA; NEW ENGLAND SAPPHIRE PROJECT, NEW SOUTH WALES; GEMVILLE OPAL PROSPECT, NEW SOUTH WALES; CAMPERDOWN NORTH PROJECT, WESTERN AUSTRALIA(gold); and DALGARANGA KEYGO JOINT VENTURE, WESTERN AUSTRALIA (gold) to name a few.

In the words of the annual report "The principal activity of the Company was changed during the financial year with the start of coal bed methane exploration and development following the acquisition of Sydney Gas Operations Pty Ltd ( formerly CBM Australia Pty Ltd )." They imported some equipment and drilling expert (John P Castleman Jr) from the USA and this was the start of the CBM exploration at Camden.

2002

September,2002. Stock exchange announcement Coalbed Methane Potential of the Hunter Coalfield. Includes report by geologist William Barker which provided detailed information on the potential of Hunter Valley coal measures as a source of methane.

February 20,2002 - Sydney Gas Acquires an Additional Petroleum Exploration Licence "Sydney Gas has begun its move into the Hunter Valley and Newcastle regions, and is
intent upon fully developing its extensive acreage across PELs 2, 4, 5, 267 and 441."

April 18, 2002 - New Drilling Program Underway. Sydney Gas reported plans to drill several core holes in the Hunter regions of PELs 4 and 267,

April 30, 2002 - Sydney Gas signs MOU with Bulga Coal This memorandum of understanding provides:"... for both companies to work together upon a joint feasibility study that is designed to lead to the extraction of coalbed methane from Bulga’s coal mines in the Hunter Valley for safety, environmental and commercial reasons." This looks like a reasonable project, extracting gas from the mining leases, yet, for reasons unknown, got exactly nowhere!

June 14, 2002 - Hunter Region Drilling Activities Report "Commencement of Second Core Hole.. It is located approximately 20 km's East of Singleton within both Petroleum Exploration Licence 4 (PEL 4) and Coal Authorisation 444 (A 444). The core hole is being drilled in conjunction with United Collieries Pty Ltd, a member of the Enex Resources Group (Xstrata), under the Memorandum of Understanding announced on 30 April 2002. " Another unsuccessful cooperation with a mining company. why?

July 16, 2002 - Sydney Gas Retained by NSW Government to Study Commercial Production of CBM in the Upper Hunter Region Announced by Bob Carr. Quote:"It will involve a geological assessment of the CBM prospects in the vicinity of the South Bulga Coal Mine in the upper Hunter and will conclude with a written feasibility report on the prospect of commercialising CBM production for use in the Singleton and Muswellbrook regions of New South Wales."

2003

January 29, 2003 - Change of Company Name and Code on the Stock Exchange"We advise that effective at the start of trade on the Australian Stock Exchange on
Wednesday 29 January 2003 the Company will trade under the name “Sydney Gas
Ltd” and the code 'SGL'."

July 7, 2003 - Sydney Gas to Kick Start Gas Project in the Hunter Quote:"Methane is a form of natural gas trapped within the vast coal seams. In the
Hunter region, gas is currently vented to the atmosphere from coal mines for
safety reasons. Sydney Gas has imported and refined the necessary technology to
safely and efficiently extract gas from coal seams, allowing the Company to capture and utilize this valuable resource." Once again, gas extraction from the existing mining leases was the right thinking. Yet, once again, nothing came out of it.

July 8, 2003 - NSW Minister for Mineral Resources & Dr Bruce Butcher launch Hunter Gas Project in Newcastle. Quote from the speech of Mr. Hickey:

  The Government clearly expected some gas production from the coal mines.

  November 6, 2003 - Sydney Gas Commences Drilling at Wyong Quote:

2004

March 22, 2004 - Sydney Gas Wyong Gas Project Production Well Spudded. Quote: "The JB 1A and JB 2A production wells are being drilled to gather as much production
data as possible. This will not only assist Sydney Gas to test the geological model and
ultimately delineate the high production fairway being developed for the Wyong
area, but will also determine the gas potential of three major coal seams for the future
development of the whole Wyong Gas Project." Sounded pretty optimistic - a big Wyong Gas Project!

May 11, 2004 - Sydney Gas Update on Wyong Gas Project Quote: " ...It is planned that the JB 1B and JB 2A production wells, located adjacent (our emphasis) to the JB 1 and JB 2 core holes that were drilled by Sydney Gas during November and
December 2003, will be fracture stimulated and completed towards the latter part
of this month in order to test the gas flow potential of all targeted seams ..." This looks like both exploration and production wells on the same property and, presumably, under the same access agreement!

Quote:"Sydney Gas is now considering other locations at Wyong for additional bore holes
and production wells with a view to carrying out extensive reservoir analysis and
characterisation over an expanded area ... " Still pretty optimistic.

 

November 1, 2004 - Sydney Gas Drilling Underway in Hunter Gas Project. Quote: " The initial drilling program involves two production wells, Hunter-Bulga (“HB”) 1
and HB 2, located in the vicinity of the Bulga mine site approximately 25km south of
Singleton. These wells are to be located approximately 600m apart and it is Sydney
Gas’ intention to drill and complete one coal seam in each ..." That would be the wells at Broke.
Quote: "The location of these production wells has been carefully chosen, based on a thorough understanding of the geology that Sydney Gas has from its extensive geological work and reservoir characterisation in the area, and each well is to be drilled within Sydney
Gas’ high production fairway that is being delineated in the Hunter...". Are the geological reports that provide this " thorough understanding" published? Only one (see William Barker's study, September, 2002 above) was presented so far.

2005

January 24, 2005 - Sydney Gas Feasibility Study With CO2CRC Into Greenhouse Gas Reduction Sydney Gas Ltd and the Cooperative Research Centre for Greenhouse Gas
Technologies (CO2CRC) today signed an agreement to undertake a joint feasibility
study that will assess the effects of injecting CO2 into coal seam reservoirs in the
Sydney Basin as a means of storing CO2 in, and enhancing gas recovery from, coal
seams utilising the latest cost effective geosequestration technologies available.

February 4, 2005 - Sydney Gas' Hunter Gas Project Feasibility Study Electricity / LNG Opportunities. Quote: “'Sydney Gas is committed to moving into the Hunter and Newcastle regions, fully developing PELs 2, 4 and 267 and replicating in New South Wales the success that gas produced from coal seams is now enjoying in the United States. It is expected that the results from this feasibility study will broaden the range of options that Sydney Gas has to commercialise its operations within the Hunter Gas Project and exploit the very large gas
resource that we have identified there', said Dr Butcher." Unhappily, Dr Butcher is no longer with us to see the success of his vision.

February 4, 2005 - Sydney Gas' Hunter Gas Project Feasibility Study Electricity / LNG Opportunities Quote:"Domenic Martino, for and on behalf of the Board of Sydney Gas Ltd, is pleased to announce the appointment of the Honorable Michael Knight AO as a non-executive Director of the company and Chairman of the Board, with effect from today. "

June 8, 2005 - Sydney Gas Drilling Update - Wyong Gas Project Quotes:"Drilling Resumes in Wyong: JB13 Spudded Sydney Gas Ltd advises that its drilling program within the Wyong Gas Project has resumed with the spudding of Jilliby (“JB”) 13 well on 7 June 2005....
....Long-Term Production Capability The JB wells are being drilled in order to confirm the long-term production capability of Wyong as a standalone project area. Once drilled,... "
and so on. Why suddenly a standalone project ?

June 24, 2005 - MD Leaves Sydney Gas Quote:"Sydney Gas Ltd (SGL) CEO and MD, Dr Bruce Butcher, has completed his contract with the company. The Board has not offered Dr Butcher a new contract and his employment has ceased. The Board thank Dr Butcher for his service to the company and wish him well in future endeavors. Chief Operating Officer Andrew Purcell will be acting CEO while a search for a replacement CEO is undertaken. The salary of the new CEO will be commensurate with that of a business of comparable size and nature to Sydney Gas Ltd."
Meaning that the salary would not be over 3,000,000/year again?

 

July 4, 2005 - Strategic Review of Sydney Gas Ltd This is a fascinating document that shows a lot about the management practices within SGL. Anyone trying to form an opinion about the company should read this document in full.

Quotes: "The Board of Sydney Gas will undertake a series of reviews into company strategy and operational issues with a view to improving the company operating position and outlook in the new financial year. The new Chairman of Sydney Gas, Mr Michael Knight,(emphasis added within this quote) announced the reviews to be undertaken by sub-committees of the Board and external advisers ...

....Exploration Projects: Sydney Gas has a number of projects under development including in the Hunter region, in the Wyong area and at other locations. The review will advise on development timetable and prospects for each location including current status, development program, costs to production, supply contracts, financial projections and analysis, environmental and regulatory issues.

...STAFFING Sydney Gas cannot function effectively without a highly talented and motivated
staff. Our staff must be properly remunerated. However, Sydney Gas needs to ensure that the remuneration is within the appropriate range for a company of this size and stage of its development. We need to ensure that we have the appropriate number of people, that they are each in the right job and that their salaries are properly benchmarked against performance.
The Board noted concerns expressed by some investors over the salaries ries and bonuses paid to the former CEO and previous Executive Chairman who were each awarded a $300,000 bonus in 2003/2004. At the July 22 meeting, the Board considered the question of possible discretionary bonuses. Mr Domenic Martino did not seek any bonus for 2004/2005. The Board resolved not to award any discretionary bonus to Mr Martino for 2004/2005.
Dr Bruce Butcher sought a bonus of $500,000. The Board resolved not to award any discretionary bonus to Dr Butcher for 2004/2005. Dr Butcher also sought a new contract with a significantly increased salary over the contract that had expired on 31 March 2005. The Board resolved not to offer Dr Butcher any new con contrac t..."

July 13, 2005 - Sydney Gas Drilling Update - Camden Gas Project And Wyong Gas project ...Drilling continues at Wyong: Jilliby (“JB”) 13 Total Depth reached Sydney Gas Ltd advises that its exploration drilling program in Wyong continues with JB 13 reaching a total depth of 613m on Friday, 8 July 2005...

August 8, 2005 - Decision from Mining Warden Quotes: "The Mining Warden today handed down his decision regarding the legal proceedings between Sydney Gas and John Gatenby of Camden. This matter relates to one well within Stage II of the Sydney Gas Camden Project. The case was initially heard by the Court on 12 July 2005.
The Warden found that Sydney Gas is entitled to access, and carry out petroleum operations on land which falls within its petroleum production leases. Where agreement in relation to access cannot be reached with the landholder, then Sydney Gas needs to secure access via a right of way or an easement. A right of way or an easement is granted by the Minister for Mineral Resources.
Sydney Gas’ Acting CEO, Mr Andrew Purcell, said the case has not been about ‘winning or losing’ for Mr Gatenby or Sydney Gas, it is about the arbitration process ..."

August 26, 2005 - New CEO for Sydney Gas quotes: "The Board of Sydney Gas Ltd today appointed Andrew Purcell as Chief Executive Officer and Managing Director. Mr Purcell was previously the Chief Operating Officer of Sydney Gas and has been acting CEO since 22 June of this year.
In announcing the appointment, Chairman Michael Knight said that over the past 2 months the Board closely monitored Mr Purcell's performance. It also used the Springbank Group executive search firm to benchmark him against potential external candidates ..."

The following quotes contain highlights from the Mr. Knight's presentation that were relevant to the Hunter Valley gas projects.

QUOTES START:

"Hunter Exploration

• Move quickly to develop a long-term business plan
• Appraise the asset
• Prove up reserves
• Commence development
• Potentially large coal seam gas source > 600 Bcf
• Early results from Broke exploration project very promising
• Much earlier commercialisation than would have been possible
• SGL to conduct all exploration

Wyong

• Poor topography to support successful coal seam
  gas development
• Would require greatly increased infrastructure and development costs
• Economically and socially challenging
• Not an acceptable business case for proceeding
• Australian Gas Alliance
• Agreed to disband
• Publicly accepted that coal seam gas development does not harm the environment
"

QUOTES END

Statements about the Wyong project are interesting. Under the old management it was claimed that after extensive research into the geology of the area the project had a great future. Under the new management the Wyong project was abandoned. Yet the geology had not changed! What sort of science is this?

The Australian Gas Alliance, a local citizens's action group, was never before mentioned in the ASX reports. Why did they fought SGL if "that coal seam gas development does not harm the environment "? Curious.

October 26, 2005 - Sydney Gas Proposes New Name "The name being put by resolution to shareholder vote at the Annual General Meeting on 25th November is: Wollemi Energy Ltd (WEL)."

March 10, 2006 - 'Unacceptable' finding by Takeovers Panel against Queensland Gas Vindicates Sydney Gas Concerns

July 17, 2006 - Sydney Gas Appoints Emerging Energy Expert as CEO Sydney Gas Ltd (ASX: SGL) today announced the appointment of Dr Philip Moore, as Chief Executive Officer effective from 28 August 2006. 

August 16, 2006 - Sydney Gas Ltd / The Australian Gas Light Company Joint Venture plans gas exploration in Hunter Valley Sydney Gas in a Joint Venture with The Australian Gas Light Company, is starting community consultation on its gas exploration proposal in the Broke-Bulga area in the Hunter Valley, NSW.

November 16, 2006 - Sydney Gas Ltd Hosts Open Day Sydney Gas Ltd will host an Open Day as a commitment to encourage residents of the Broke Bulga area to examine the potential for gas exploration in the Hunter Valley of NSW.

December 7, 2006 - Hunter Bulga Gas Exploration - Community Information Sheet  "...SGL will provide feedback to specific questions and issues including those listed above throughout the consultation programme. A Question & Answer Sheet addressing questions and issues will be prepared and distributed to interested parties and made available at the Open Day ..."