Why are Metgasco (ASX:MEL) shares trading in green today?

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Why are Metgasco (ASX:MEL) shares trading in green today?

 Why are Metgasco (ASX:MEL) shares trading in green today?
Image source: © Kritchanut | Megapixl.com

Highlights

  • Metgasco has executed a binding term sheet for the acquisition of Patriot Hydrogen Limited.
  • Metgasco will offer certain logistical and financial assistance to Patriot to provide for shipment and delivery of plant.
  • Contingent to some important terms, MEL has the right to buy 100 per cent of Patriot worth AU$5.9 million.

Shares of Metgasco Limited (ASX:MEL) are trading on ASX today with a gain of over 8%. The oil and gas exploration and production company has executed a binding term sheet for the acquisition of Patriot Hydrogen Limited. The agreement is a crucial move for MEL on the way to becoming one of the top low emissions, multi-fuel producers.

An overview of Patriot Hydrogen

Patriot Hydrogen aims to revolutionise the energy industry through production of green hydrogen. The company has a state-of-the-art technology that extracts hydrogen from waste. The first unit produced by the company will be used by Kimberley Clean Energy (KCE) and will be put into service there in Q4 CY22.

Patriot and KCE have a memorandum of understanding for up to an additional 75 units, which will be utilised to lower emissions throughout the operational value chain of KCE as well as in a larger area of the Northern Western Australia region.

After the delivery and commissioning of first unit, Patriot will commence design and production process for several other recognised potential customers.

Do read: Australia’s clean hydrogen potential in focus amid net zero ambitions

Major terms of the acquisition

Metgasco’s acquisition of Patriot has been designed into different phases. Major highlights of the term sheet are given below:

  • After implementing the binding term sheet, Metgasco will offer certain logistical and financial assistance to Patriot to provide for shipment and delivery of the plant.
  • Subject to specific project delivery goals, MEL will commence an AU$750,000 equity investment into Patriot. It is the first stage of the option for 100% acquisition process of the company.
  • Contingent to some important terms, MEL has the right to buy 100 per cent of Patriot through an all-scrip acquisition. It will be valued at AU$5.9 million.

MEL’s June quarter results

Last month, Metgasco released its results for the June 2022 quarter. Here’s a quick look at the significant developments:

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