Why Cooper Basin gas producer Metgasco (ASX:MEL) has launched a five-for-one entitlement offer

Sonal Goyal

12 November 2026 02:06 PM AEDT

Why Cooper Basin gas producer Metgasco (ASX:MEL) has launched a five-for-one entitlement offer

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Key Highlights

The partially underwritten entitlement offer is priced at 1.1 cents and could raise up to about $2.02 million before costs.
Total cash was $1.419 million at 30 September, but $1.25 million of that is restricted for the Odin-3 and Vali-4 wells.
The company has $5.68 million of fully drawn facilities from Glennon Small Companies, with repayment extended to 30 December 2026.
The offer Record Date is 13 November 2026, and the offer closes on 1 December 2026 unless extended.

Metgasco (ASX:MEL) returned from a Trading halt on 10 November 2026 with a partially underwritten, renounceable entitlement offer of five new shares for every one held, priced at 1.1 cents, to raise up to about $2.02 million before costs. Each new share comes with one free option exercisable at 1.7 cents and expiring three years after issue.

The raising matters because of the company's balance sheet. Its September quarter Appendix 5B, released on 30 October 2026, showed just $169,000 of unrestricted cash and about 0.88 quarters of funding, while loans from its largest Shareholder fall due on 30 December 2026.

A small Cooper Basin producer

Metgasco holds a 25% non-operated interest in the Odin and Vali gas fields on the Southern Flank of the Cooper-Eromanga Basin, straddling the South Australia–Queensland border, with Vintage Energy as operator. Gas is sold into the east coast market via Moomba.

According to its September quarter activities report, average online gross raw gas production was 1.07 MMscfd at Odin and 0.36 MMscfd at Vali. Metgasco's sales Revenue for the quarter was $260,750, down 11% on the June quarter, mainly reflecting lower gas production according to the company. An independent assessment as at 30 June 2026, released on 26 October, put net 2P reserves at 6.2 PJe and 2C contingent resources at 31.45 PJe. Contingent resources are not reserves and are not yet considered commercially recoverable.

Cash, Debt and the offer terms

The 5B showed total cash of $1.419 million at 30 September, but $1.25 million of that is restricted. It is Metgasco's 25% share of $5 million in South Australian Government grants, reserved for drilling the Odin-3 and Vali-4 development wells.

Metgasco also reported $5.68 million of fully drawn facilities from Glennon Small Companies (GSC): a $2.0 million senior secured Loan and unsecured convertible loans totalling $3.18 million. Repayment of both was extended in July 2026 to 30 December 2026.

Under the offer, lead manager PAC Partners has underwritten up to $1 million. GSC, a substantial shareholder associated with director Michael Glennon, will sub-underwrite that amount, but by setting it off against its debt rather than contributing cash. The prospectus states that about $6.3 million, including accrued interest, would still be owed to GSC after the offer if it takes up its full commitment. Mr Glennon's interest, about 20% now, could range from 3.33% to 76.97% depending on take-up.

Dilution is substantial. Up to 183.7 million new shares would be issued against 36.7 million existing shares, taking the total to about 220.5 million. On full subscription, the company plans to put $0.3 million towards the Odin permanent connection project and $1.481 million towards working capital, Odin-3, Vali-4 and an oil exploration well. The prospectus notes a going-concern uncertainty in the Annual Report and says further funding is highly likely to be needed in the medium to long term.

Key dates and risks

The record date is 7pm AEST on Friday 13 November 2026. The offer opens on Tuesday 17 November, entitlements trade on ASX until 24 November, and the offer closes at 5pm AEST on Tuesday 1 December 2026, unless extended.

The main risks are refinancing the GSC debt by its 30 December due date, the possibility of a large shift in control towards GSC if take-up is weak, and production from two small fields. The Odin-3 and Vali-4 wells depend on joint venture approval of the FY27 budget, which Metgasco says is still under discussion. The company also says it remains in talks on farm-in, Acquisition or other corporate opportunities aimed at recapitalising the business, but has announced no transaction.

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