AWE’S takeover roller­coaster

The Australian Energy Review - - NEWS - CAMERON DRUMMOND

MIN­ERAL Re­sources (Min­res) has trumped China’s of­fer to pur­chase gas pro­ducer AWE with a last minute all-in scrip of­fer of 80 cents per share. China En­ergy Re­serve and Chem­i­cal Group (CERCG) had made an in­creased $463 mil­lion counter-of­fer for AWE, days af­ter an ini­tial $430m takeover of­fer was re­jected by the en­ergy pro­ducer. AWE, which is de­vel­op­ing the highly prospec­tive Wait­sia on­shore gas field in the Perth Basin, re­ceived an ini­tial of­fer of 71 cents per share, sig­nif­i­cantly higher than its 54.5 cents 30 Novem­ber clos­ing price. CERCG how­ever said it would only pro­ceed with a for­mal of­fer if it was able to con­duct a re­view of AWE’S as­sets. In a leaked let­ter to the AWE board dated the week of the of­fer, CERCG man­ag­ing di­rec­tor Lip­ing Xuan cited con­cerns over about a fi­nal in­vest­ment de­ci­sion (FID) for Wait­sia’s sec­ond-stage de­vel­op­ment be­cause of AWE’S in­abil­ity to se­cure sales con­tracts and ex­pi­ra­tion of pro­duc­tion li­censes. AWE sub­se­quently an­nounced to the mar­ket it would re­ject the ini­tial of­fer, and CERCG with­drew. “The AWE board re­mains fully com­mit­ted to act­ing in the best in­ter­ests of, and max­imis­ing value for, AWE’S share­hold­ers,” the com­pany said at the time. RBC Cap­i­tal Mar­kets oil and gas an­a­lyst Ben Wil­son said he was not sur­prised to see the ini­tial bid with­drawn. “The man­ner in which the in­dica­tive bid was re­buffed, specif­i­cally mak­ing the bid let­ter pub­lic in the con­text of keep­ing pos­si­ble SPP in­vestors fully in­formed, pos­si­bly im­pacted the bid­der’s ap­petite to push ahead,” Mr Wil­son said. Days later, CERCG re­turned to the ne­go­ti­at­ing ta­ble with a di­rect cash of­fer of 73 cents per share, stronger than its ini­tial con­di­tional ap­proach for the com­pany. How­ever on 11 De­cem­ber – in what may spark a bid­ding war – Min­res swooped in with its own of­fer, valu­ing the com­pany at $507m. Min­res said the ac­qui­si­tion of AWE would fit in with its clean en­ergy strat­egy of se­cur­ing gas as­sets to ver­ti­cally in­te­grate its sup­ply chain, and would not ex­port any pro­duc­tion. “Min­res does not cur­rently in­tend to sell any gas from AWE’S Wait­sia gas project off­shore as it is com­mit­ted to sup­ply­ing do­mes­tic gas in Aus­tralia and is a large con­sumer of do­mes­tic gas in its own right, with such con­sump­tion to grow con­sid­er­ably as [the com­pany’s] pre­vi­ously an­nounced pro­cess­ing and in­fra­struc­ture projects come on line,” the com­pany stated. Wait­sia, 50 per cent owned by Lat­tice En­ergy, is ex­pected to un­dergo a FID early this year. Be­fore the takeover of­fers, AWE man­ag­ing di­rec­tor David Biggs had de­scribed Wait­sia’s lat­est well as the high­est on­shore con­ven­tional gas flow ever recorded in Aus­tralia.

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