AOE - Arrow Energy

[Dangerous]

I think BG will put in a bid for AOE (or i'm hoping). I did wonder the following:

BG have ensured AOE pay more for PES. Was their 6.40 bid that serious - did they really want PES? I am not convinced. Now if BG put in a bid for AOE, Shell could have to top it meaning Shell pay more for AOE.

On the depth of BG pockets. I don't think you can compare the 13B BG were to spend on Origin to any other CSG stock. Origin's retail arm is well established. Apart from AOE and QGC, the rest are miles from producing. Look at the price paid for Sunshine and all they have are a few wells and a drilling program - now compression, no trunklines, no processing, nothing!...

That said, QGC was a bargain. Had QGC had a few more 2P reserves in some different tenements BG would have had to have paid lots more!

 

[anatol]

BG actually did not need a well established retail arm like Origin's. It would be a burden for BG. BG ships out the gas from the LNG plant, they also have 10 year contracts to supply gas to Singapore and Hong Kong now.

AOE is pure CSG company, very well establisehd and only sells the gas to wholesale market. AOE suit best to BG's interest as it is, has acrages both in Surat and Bowen basins. (QGC has mainly in Surat Basin - South East QLD) Bowen basin may be more important than Surat basin for them, I'm not sure now (needs more research). So there is no choice other than buying AOE for BG.

I beleive Shell is not very serious in this game. They have huge plants in all around the world. Their announcement yesterday regarding to the LNG plany research in Curtis Island does not mean anything to me. Shell tries to acquire AOE's reserves in a very cheap price, if the price goes up, they may turn back. That all depends on BG's approach to AOE. Friendly or hostile / That's the question.

The main question is; AOE is very cheap at this price or not? BG and Shell will be looking at this. PEs is jsut a part of that which is already expensive IMO.

 

[oldblue]

I can't believe that Shell is not deadly serious about it's stake in AOE's CSM interests. At the same time as it is showing interest in Curtis Island land and settling with the final payments to AOE they have announced that they are weighing options for the possible sale of their downstream assets in New Zealand, including 230 petrol stations, their 17% interest in New Zealand Refining, 36% interest in road building company Fulton Hogan as well as aviation, bitumen, chemicals, commercial fuel and marine businesses.

Looks to me like they are putting together a war chest to fund a major investment in upstream business such as CSM to LNG.
Can only be positive for AOE.

 

[Logique]

I think some posters are getting carried away.

I think its likely that that this will all end in a stalemate, with BG/former QGC and AOE/Shell both having large chunks of PES. Thus the relativities between the two consortiums will remain little changed. In this circumstance it won't really matter who has the majority holding in PES.

So what would be the urgency for BG to take over AOE ?

The logical outcome further down the track, is a friendly merger between the two consortiums. I think the real agenda here is - positioning to negotiate the best terms in a future merger. It will cost a lot of money to build a plant at Curtis Island, cheaper to build one - than two competing plants.

 

[anatol]

You might be rigth Logique, but only for the past, not for the present and future, IMO.

A JV between two groups or consortiums (Shell/AOE and BG Group) would be the best solutions. It is much cheaper to built one LNG plant instead of two. ($7b cost to built one)

If BG could manage to buy AOE, how many LNG plants would be built then do you think ? The answer is only one. Shell would be out of this game. BHP (sold CH4 to AOE) and Woddside is already out of this game ! It is not end of the world for them, nor would be for Shell. Also, Shell might not invest too much in this risky CSG business as it is not proven yet that CSG would be well accepted (quality and price) by the markets in the future.

And yes, BG might be trying to position itself to negotiate the best terms in a future merger with Shell/AOE before PES bidding. But it is too late now. PES's price and its shareholders expectation is over the top now.

AOE's counter attack after BG's attack on PES, seems to me that they have already made some discussion about a kind of JV before. But they might not agree on terms. Maybe BG could not get a satisfactory outcome. Maybe Shell ignored BG. (Shell is 4-5 times bigger than BG. BG's last years profit is $7b whie Shells' $35b).

I told previously that BG has a different stategy in this game which we don't know now yet. PES is not a strategical target for BG, bidding on PES is just a tactical attack. But what is the strategic target and when will BG make their strategical attack on this fight? That is the question.

So I am talking about "Hostile bid" on AOE by BG, as BG's next and strategical attack.

The urgency for BG to buy AOE might be, if BG lets AOE to buys PES, then there is no way to buy AOE later on. And BG needs more reserves, that's for sure.

 

[oldblue]

Hi anatol.

If I am reading you correctly you're saying that BG won't counter-bid for PES but will instead look to takeover AOE?
I can't see Shell standing by and letting that happen.

 

[beerwm]

You might be rigth Logique, but only for the past, not for the present and future, IMO.

A JV between two groups or consortiums (Shell/AOE and BG Group) would be the best solutions. It is much cheaper to built one LNG plant instead of two. ($7b cost to built one)

If BG could manage to buy AOE, how many LNG plants would be built then do you think ? The answer is only one. Shell would be out of this game. BHP (sold CH4 to AOE) and Woddside is already out of this game ! It is not end of the world for them, nor would be for Shell. Also, Shell might not invest too much in this risky CSG business as it is not proven yet that CSG would be well accepted (quality and price) by the markets in the future.

And yes, BG might be trying to position itself to negotiate the best terms in a future merger with Shell/AOE before PES bidding. But it is too late now. PES's price and its shareholders expectation is over the top now.

AOE's counter attack after BG's attack on PES, seems to me that they have already made some discussion about a kind of JV before. But they might not agree on terms. Maybe BG could not get a satisfactory outcome. Maybe Shell ignored BG. (Shell is 4-5 times bigger than BG. BG's last years profit is $7b whie Shells' $35b).

I told previously that BG has a different stategy in this game which we don't know now yet. PES is not a strategical target for BG, bidding on PES is just a tactical attack. But what is the strategic target and when will BG make their strategical attack on this fight? That is the question.

So I am talking about "Hostile bid" on AOE by BG, as BG's next and strategical attack.

The urgency for BG to buy AOE might be, if BG lets AOE to buys PES, then there is no way to buy AOE later on. And BG needs more reserves, that's for sure.

Dont agree with you at all on this.

Considering the recent aquisitions in the sector, PES has great location and price/reserves is much lower even at current price $7.50.

BG wants gas, and PES being sooo cheap, it had to make a play, even with 35% tied up between AOE/SHELL.

I guess time will tell, my guess BG makes a bid at $8-8.50

 

[Dukey]

IMO - PES is most definitely a strategic play for BG... PESs's's's's best csg acreage is right on the sweet spot of the Walloon fairway - between ex-QGC and ex-SHG projects. - and their last market announcement seemed to me designed to emphasize that fact.

It could even pan out that BG would be happy to make a deal for 851p or 852p -(whatever it is..?). and leave the rest to AOE/shell.

Personally I think if BG wanted AOE - they would have waited until AOE had wrapped up PES and then gone in HARD.....
.... BUT - I don't think they want AOE - the resulting war with shell could be too costly...so PES is the next best thing, and thats the one the want... or at least part of it.

all just my

... looking forward to the next installment.
-dukE

 

[Dangerous]

I think it needs to realized that guys like PES have no development at all... AOE's and QGC's are miles ahead of the game.... miles

 

[anatol]

Hi anatol.

If I am reading you correctly you're saying that BG won't counter-bid for PES but will instead look to takeover AOE?
I can't see Shell standing by and letting that happen.

You are reading me correctly, BG or Shell will buy AOE. I was saying in December that Shell had to buy AOE. I told this depends on the analisys of future events. Now the day is coming. If Shell won't buy AOE, BG will try to buy it. Then Shell might bid again,.. or vise versa. One of them will buy AOE.

That means we will see a big fight between Shell and BG very soon, (maybe this week, maybe tomorrow)

I told before, saying again, AOE has 20% of certified gas reserves, PAS has 5% (of QLD). Calculate the value then. Whether AOE is very cheap or PES is very expensive ! We have to accept one of these, they both can't be true. I would accept AOE is very cheap. (PES's market value is nearly half way of AOE, that is nonsense. As Dangerous said, AOE miles away from PES)

Let AOE buy PES, then buy AOE. That was Shell's plan. So BG is trying to block that plan. So this fight is about AOE anymore, not about PES.

Anyway this is being a long story here. I'll wait for the result.

 

[Logique]

It could even pan out that BG would be happy to make a deal for 851p or 852p -(whatever it is..?). and leave the rest to AOE/shell.

Personally I think if BG wanted AOE - they would have waited until AOE had wrapped up PES and then gone in HARD.....
.... BUT - I don't think they want AOE - the resulting war with shell could be too costly...so PES is the next best thing, and thats the one the want... or at least part of it.
-dukE

Revised all cash unconditional offer for PES $8.00 from BG this morning, see ASX ann's. Could be game over. This says to me PES is their target. BG wants PES, or at least a big chunk of it. Still don't see the rush for Shell (or BG) to attempt takeover of AOE, and the AOE price could get softer if BG's $8.00 offer gets them a big chunk of PES.

 

[Dukey]

Revised all cash unconditional offer for PES $8.00 from BG this morning, see ASX ann's. Could be game over. This says to me PES is their target. BG wants PES, or at least a big chunk of it. Still don't see the rush for Shell (or BG) to attempt takeover of AOE, and the AOE price could get softer if BG's $8.00 offer gets them a big chunk of PES.

Yep - very nice counter and confirms they weren't playing silly buggers - not that I ever thought they were. PES makes prefect sense for BG. They are thinking big and long term. Wish I could buy BG shares cause they might win this battle yet.
As an aussie I really hope AOE can land a knock-out blow somehow. Maybe it will take Shell to step in and there goes a large chunk of our gas to another BigOil multinational.

 

[oldblue]

Yep - very nice counter and confirms they weren't playing silly buggers - not that I ever thought they were. PES makes prefect sense for BG. They are thinking big and long term. Wish I could buy BG shares cause they might win this battle yet.
As an aussie I really hope AOE can land a knock-out blow somehow. Maybe it will take Shell to step in and there goes a large chunk of our gas to another BigOil multinational.

I think that particular writing's been on the wall for some time now. Shell have paid AOE good money for 30% of their Aust CSM assets. Looks very much like a toss up between BG and Shell.

 

[anatol]

It has become obvious today that AOE will not bid for PES anymore.

What if ; AOE buys another %16 PES shares over $8 from the market and goes over 50.1% together with Shell, and take the control of PES. (This is what BG wants to do, but they are quite far from doing that for now)

After buying that %16 shares, AOE would not need to buy any more of them at that $8 price. Then they would leave it to the market.

Would BG buy any more at $8 price if AOE goes over 50.1% ? (I wouldn't as there is no meaning for it. It would be waste of money)

If not, what would happen to the SP of the PES shares who are still being hold by their owners. If no one buys, SP will go down. (It is going down now)

PES holders should be very carefull.

They should not trust to BG.
BG does not know what they are doing. BG should have bought half of ORG last year, or should have bought AOE instead of QGC, plus PES, easily. That would be enough for them. Now they are trying to repair their mistake by paying more money. They paid a lot of money to QGC which does not have a larger CSG reserves than AOE. Also QGC's big acrages (ATP688P in Bowen Basin and ATP769P in Surat Basin) are shared 50% with WCL and there are no certified reserves on these acrages (and the biggest acrage 688P in Bowen basin is not very hopefull because of the volcanic staff mixed in the CSG here). ATP811P (next to PES acarage in Bowen Basin) and ATP693P are already left by WCL as there was no hope for CSG in them. So what is left? There are some acrages in Surat Basin, but they are not enough. Who is left? PES and AOE ! Can BG buy them? Not sure!

I would sell PES shares over $8 now and buy AOE shares if I was holding PES shares.

(I am an AOE share holder)

 

[oldblue]

If AOE buys any PES shares on market they will have to increase their offer to the highest price they pay and pay that for any shares taken to date.
I don't see that happening.

 

[Dukey]

If AOE buys any PES shares on market they will have to increase their offer to the highest price they pay and pay that for any shares taken to date.
I don't see that happening.

Interesting oldblue - I wasn't aware of that rule - but i guess it makes sense. I presume the same applies to BG??

what if they get a 'proxy' to buy their shares on market, and then buy them for the offer price off market (obviously paying the difference some other way?) - underhanded tactic of course - but I'm sure it happens.

(we all know by now - ATSIC is a useless, toothless pussy cat! )

 

[oldblue]

Yes, BG have to play by the same rules of course.

I believe that "associates" of a bidder are also bound by this but I'm not clear on what the definition is and whether Shell would be so regarded in relation to AOE.

May still be an act or two to play out yet!

 

[anatol]

Does anyone know what the hell was that 100 AOE shares purchase was being processed in every 6 seconds today? Actaully that was happening yesterday too. It was in auto mode when the SP is $2.50, and was going up to $2.51, $2.52, $2.53...!!!! (Stopped if it was under $2.50) Never seen anything like that before !

 

[beerwm]

looked back at the course of trades,

some 100 lots at 2.49, too.

my guess, probably about 2000 100lot traded
$500,000 worth of AOE being accumulated.

 

[Dukey]

Comsec currently showing 7.4 Mill AOE shares traded already today - while over the last couple of weeks AOE has traded less than 3Mill shares - in a full day.
... interesting