History
Carbon Minerals found coal seam gas in New South Wales' Gunnedah Basin, ended up with a 35% stake as Santos took 65%, waited years on field work, and was delisted from the ASX in 2024.
2006-2008: Drilling the Gunnedah Basin
In early 2006 Carbon Minerals was exploring for coal seam methane gas in the Gunnedah Basin, New South Wales, after more than six months waiting for a rig. Longlea #1 was spudded (started) on 24 February in PEL 12, and its gas proved high quality, with the Breeza seam 98% methane. The company suggested the Benelabri area could hold 500-750 BCF of gas in place, though it called this unproven and based on older coal data. The trial field had a setback when Georges Island #2 lost its casing and tools, but a redrill, Georges Island #2A, reached 353 m and completed the program.
To pay for more exploration, the company called 10 cents on each of its 18,803,493 partly paid shares, raising $1.88 million. In August 2006 it sought partners for the Maules Creek Sub-Basin and the Bando Trough. In June 2007 Santos answered with a farm-in: it could earn 25% of PELs 1 and 12 by spending at least $10 million, then a further 40% by spending at least $30 million, and became operator. In 2008 shareholders were asked to cancel the uncalled capital so the partly paid shares became fully paid ordinary shares. Kahlua #1, drilled that year, found over 30 m of coal and gas pointing to the same biogenic gas type as Georges Island.
2008-2011: Santos earns in
Santos drilled Stoney Creek #1 in October 2008, but missed the December 2008 spending deadline for phase 1, and was given 12 more months. Results were mixed: Slacksmith #1 reached 1,410 m, the deepest well in the basin, but its Late Permian coals were under-saturated, and Kerawah #1 found tight coal with high carbon dioxide. Phase 1 ended in December 2009 with Santos holding 25%.
In April 2010 the company gave its first contingent resource estimates for its 75% share of PEL 1, with a mid-case 2C figure of 183 PJ. Santos elected in June 2010 to start phase 2, a pilot program requiring at least $30 million of spending to earn a further 40%. Four Kahlua pilot wells confirmed thick, permeable coals, though Cana #1 in March 2011 found very low gas in the Late Permian coal, marking the edge of the best gas area.
In September 2011 an agreement resolved the earlier dispute-ridden farm-in. Santos took a further 40% for $15 million cash, leaving Carbon Minerals with 35% and Santos 65%, with the company's share of a new work program capped at $13 million.
2013-2019: Loss of a chairman and a long hold
Executive Chairman Paul Lincoln Smith, chairman since the company formed in 1980, died on 3 March 2013. His son Marcus Lincoln Smith, already a director, was elected Executive Chairman on 15 March. In the same period new NSW controls, including a 2 km exclusion zone and a licence requirement, delayed Kahlua remediation and core drilling. PEL 12 was renewed to September 2016.
In January 2014 the company and Santos restructured their arrangements: Santos would do the paused field work when reasonable, and the $13 million cap continued, with no restart date. The 2015 annual report showed field work on hold apart from maintenance, PEL 1 renewal pending, and a loss of $7.24 million, mostly a $7.142 million write-down of asset book value. Cash was $4.99 million. The record is quiet for 2017 to 2019.
2020-2024: Restart and delisting
In March 2020 a $9.865 million work program was approved, including reactivating the Kahlua pilot with a six-month production test, and the company's 35% share was $3.453 million from cash. It also arranged an unsecured loan facility of up to $1.25 million from Palmarc Investments, a company associated with the Lincoln Smith directors. The facility was undrawn by September 2023.
In February 2022 the ASX suspended trading, saying the company's level of operations did not warrant quotation. In April 2022 NSW renewed PEL 1 and PEL 12 for six years to April 2028. The regulator approved the Kahlua pilot review in March 2023, and Bando seismic data was acquired in early 2023, with analysed results still awaited in October.
Because the shares had been suspended for two continuous years, and the shareholder spread requirement was not met, the ASX declined an extension and removed the company from its Official List on 14 February 2024. It continued as an unlisted public company. At 31 December 2023 cash was $1,072,412, down from $2,609,727 at 30 June 2023, with no debt drawn. The Lincoln Smith family controlled about 80% of roughly 18.8 million shares, and Santos's right of first refusal on a change of control now applied. A private share trading platform was being investigated.
Written from the 33 story beats below (2006 to 14 Feb 2024), which come from the company's own announcements and filings.