AOE - Arrow Energy

[vicb]

Just couldn't help myself.
Topped up my holdings again for a short term trade @ 5.02.
With the 1st offer in at $4.45 + new shares, there is not much in my opinion to loose at $5.02.
Hope to see another bidder come in.
At the least a revised offer.

 

[chops_a_must]

Yes correct.
Plus a new share in arrow international.
The offer is $4.45 + shares in arrow international.
Depending what the new shares are worth the offer looks interesting and should be valued at higher then $4.50.

There really isn't much being priced in for further offers or the value of the new shares. If I didn't already have heaps of Arrow, I would be buying more. There is obviously a risk of the deal falling apart... but to me this sets an absolute base line for any future t/o, or minumum worth.

I can't see most shareholders accepting this deal.

I certainly wont. It will be worth a lot lot more than this deal is in 5-6 years at the most. And with the amount that I hold, and the length I've already held these for, as most know here, I can see absolutely no point in selling at this level.

I think it would be a massive travesty, and would be another huge foreign investment regret for Australia if it was to be sold at this price. It would mean Queensland effectively has very little Australian owned energy reserves, or future potential for Australian owned energy reserves in the region.

 

[nunthewiser]

Whoa ......long time no see chops ......... there was rumour going round that you been abducted by a pair of swedish nympho,s that tied you up and wore out all your assets .......


nice to see ya

 

[chops_a_must]

Whoa ......long time no see chops ......... there was rumour going round that you been abducted by a pair of swedish nympho,s that tied you up and wore out all your assets .......


nice to see ya

Haha... yeah you're close with the Swedish nympho thing. Nah, just moved to Darwin about 6 months ago and haven't been doing much apart from getting myself set up.

Back in Perth for a bit to graduate and bring my trading computer back with me, amongst other things, so I'll be around a bit more again.

 

[vicb]

There really isn't much being priced in for further offers or the value of the new shares. If I didn't already have heaps of Arrow, I would be buying more. There is obviously a risk of the deal falling apart... but to me this sets an absolute base line for any future t/o, or minumum worth.

I can't see most shareholders accepting this deal.

I certainly wont. It will be worth a lot lot more than this deal is in 5-6 years at the most. And with the amount that I hold, and the length I've already held these for, as most know here, I can see absolutely no point in selling at this level.

I think it would be a massive travesty, and would be another huge foreign investment regret for Australia if it was to be sold at this price. It would mean Queensland effectively has very little Australian owned energy reserves, or future potential for Australian owned energy reserves in the region.

Yes good points. I do not think they have much chance with that offer.
I see the price of .50 - .80 being thrown around for aoei. Not sure how correct that figure is right. But if it is in the ball park it will put the value at about 5.00 a share (pretty low).
Would of loved to have seen AOE in 2 - 3 years.
Have bought back in for a short term trade, happy to pick up a couple of % as an extra bonus.
Will be an interesting couple of weeks ahead.
All the best

 

[Tysonboss1]

I won't accept at that price, AOE would be worth double that once the LNG plant is in production.

I can't see any other company making a rival bid when shell has a 30% stake. The only hope is for a vast number of share holders to reject the offer and maybe a higher price would be offered.

I think I would rather have an all cash offer made, The Arrow international assets are a bit of a rag bag of unproven assets,

 

[Tysonboss1]

It would mean Queensland effectively has very little Australian owned energy reserves, or future potential for Australian owned energy reserves in the region.

Australia would still benefit from taxes and royalties from the operations, not to mention employement of staff and contractors in all the suporting industries.

Foreign ownership doesn't really bother me if the price is right.

 

[oldblue]

I won't accept at that price, AOE would be worth double that once the LNG plant is in production.

I can't see any other company making a rival bid when shell has a 30% stake. The only hope is for a vast number of share holders to reject the offer and maybe a higher price would be offered.

I think I would rather have an all cash offer made, The Arrow international assets are a bit of a rag bag of unproven assets,

Shell's current stake is in AOE's Australian csg assets, not AOE itself. Anyone else bidding for AOE would start on an level field with Shell, assuming of course that they havn't already built a start through a nominee holding!

OK, maybe just wishful thinking on my part to some degree.

I hold AOE, BOW and STO.

 

[chops_a_must]

Australia would still benefit from taxes and royalties from the operations, not to mention employement of staff and contractors in all the suporting industries.

Foreign ownership doesn't really bother me if the price is right.

It adds absolutely zero benefit to the economy though. There may even be ways a foreign company can pay less taxes than an Australian one would.

Whether a company is Australian or foreign owned has little impact on employment. Probably slightly negative as more of the positions of higher authority would be flown in.

The biggest difference would be in a greater amount of money from operating profits staying in Australia, throughout the chain if the company remained Australian owned.

It always worries me when a foreign company buys up the best assets of an area, no matter what country, in what region or for what purpose. And there always has to be a premium paid for that loss of sovereignty the country has.

 

[nioka]

I'm happy to take today's price and invest the proceeds in BUL. BUL is at the same stage as AOE was when I made my first investment there. I would prefer that we were not selling more of the farm but for years now we have to keep selling off assets to fund the current account deficit.

 

[Tysonboss1]

It adds absolutely zero benefit to the economy though. There may even be ways a foreign company can pay less taxes than an Australian one would.

Whether a company is Australian or foreign owned has little impact on employment. Probably slightly negative as more of the positions of higher authority would be flown in.

The biggest difference would be in a greater amount of money from operating profits staying in Australia, throughout the chain if the company remained Australian owned.

It always worries me when a foreign company buys up the best assets of an area, no matter what country, in what region or for what purpose. And there always has to be a premium paid for that loss of sovereignty the country has.

QLD would still benefit greatly as staff income taxes, royalties and company taxes from both aoe operations and supporting companies flow through the entire qld economy via government wages ( teachers, police, soldiers etc.etc) and other government spending.

We can't have it both ways, We can't have the likes of BHP and RIO mining the world and not have our doors open.

Plenty of aussie companies with large foreign investments.

 

[chops_a_must]

QLD would still benefit greatly as staff income taxes, royalties and company taxes from both aoe operations and supporting companies flow through the entire qld economy via government wages ( teachers, police, soldiers etc.etc) and other government spending.

We can't have it both ways, We can't have the likes of BHP and RIO mining the world and not have our doors open.

Plenty of aussie companies with large foreign investments.

The difference being that energy and energy security is going to be an enormous issue over the next 30-40 years. It no longer then is a free trade issue but an independence and self-sufficiency issue.

If push comes to shove, then the location of the owners of the business are going to have a stronger loyalty to home. Foreign owned companies often have a much poorer environmental and worker welfare standard than home grown businesses, simply because of the potential for blowback and local understandings.

The point being that it will ultimately benefit the Australian economy if it is taken over, but would it be of greater benefit if it remained in majority Australian ownership? All things being equal then yes, it would be better if it remained in Australian hands.

Despite this, I think we both agree that it is an opportunistic grab on a dip over funding concerns, and the offer from what we gather really only values the company on its current assets, and does not even come close to factoring in future worth.

 

[oldblue]

I'm not sure about the "stronger loyalty to home" bit.

Without govt direction/intervention, admittedly not to be ruled out completely, companies will always sell their goods into the market offering the best return. That may or may not be to the benefit of "home".

 

[chops_a_must]

I'm not sure about the "stronger loyalty to home" bit.

Without govt direction/intervention, admittedly not to be ruled out completely, companies will always sell their goods into the market offering the best return. That may or may not be to the benefit of "home".

For example, in the 90s, Richard Court agreed to lobby strongly, and very successfully on behalf of Woodside for sale of LNG to the Japanese.

In return, Woodside gladly supplied cheap gas to WA on a long term contract.

It's much easier to gain control over Australian companies in a regulatory manner than it is multi-nationals because of various international agreements.

 

[gooner]

QLD would still benefit greatly as staff income taxes, royalties and company taxes from both aoe operations and supporting companies flow through the entire qld economy via government wages ( teachers, police, soldiers etc.etc) and other government spending.

We can't have it both ways, We can't have the likes of BHP and RIO mining the world and not have our doors open.

Plenty of aussie companies with large foreign investments.

Government can also supertax the profits of Energy resources if it so chooses by increasing the Petroleum Resource Tax, so still plenty of levers.

I pulled out midway through the PES battle (sold at 666 as I recall vs final bid price of 825). Am going to hold AOE for a bit longer as sure there will be at least one bid increase in the absence of competition. With competition, who knows........

I hold AOE

 

[Tysonboss1]

Despite this, I think we both agree that it is an opportunistic grab on a dip over funding concerns, and the offer from what we gather really only values the company on its current assets, and does not even come close to factoring in future worth.

Yes I agree, I would much rather continue to hold AOE than sell out at this level. The next three years will see many things benefit AOE's bottom line that are not fully priced into the offer price.

2P reserves will probally more than double with in 3 years,
Much Higher prices for Gas should arrive due to the LNG plant,
Higher prices and volumes for domestic gas also as more is shipped south to cover higher usage growth in nsw and vic.
Higher electricity prices and volumes,

I would rather continue holding even if it ment the share price went back to $3.50 when the deal fell apart.

The question is will the institutions have the same long term veiw, or will the sell out to make their figures look better before the end june.

 

[grace]

There really isn't much being priced in for further offers or the value of the new shares. If I didn't already have heaps of Arrow, I would be buying more. There is obviously a risk of the deal falling apart... but to me this sets an absolute base line for any future t/o, or minumum worth.

I can't see most shareholders accepting this deal.

I certainly wont. It will be worth a lot lot more than this deal is in 5-6 years at the most. And with the amount that I hold, and the length I've already held these for, as most know here, I can see absolutely no point in selling at this level.

Chops, I am so glad to see you back here. Agree with your sentiment too. Far too cheap.
While I have your attention, I must thank you for steering me into csg in the early days. It was your initial research that directed many here on ASF to go for the minnows which became billion dollar takeovers. Thank you.

 

[Smurf1976]

For example, in the 90s, Richard Court agreed to lobby strongly, and very successfully on behalf of Woodside for sale of LNG to the Japanese.

In return, Woodside gladly supplied cheap gas to WA on a long term contract.

It's much easier to gain control over Australian companies in a regulatory manner than it is multi-nationals because of various international agreements.

And in more recent times WA industry has been in crisis, and increasingly uncompetitive internationally, as gas prices soar...

That argument aside, my own view is that if you're going to buy into energy then now is the time. I don't have a link but certainly there's plenty of credible research that points toward an oil supply deficit (globally) about 3 years from now assuming "business as usual" consumption and that all announced major supply developments actually do proceed.

In terms of gas and Australia, one thing I'll go out on a limb and predict is that by the end of this decade there won't be any cheap (present price or close in inflation-adjusted terms) gas contracts available. We''ll be paying international pricing for gas as LNG is able to take huge volumes and companies choose to leave it in the ground for a 30 year LNG contract rather than sell it cheaply into the domestic market.

I'm aware of at least one significnat (several % of total Australian production) electricity generator that has been acting on the assumption that this occurs for several years now. It is presumably also the only reason there is still interest in building coal-fired plant - short term gas is comparable cost (plants are cheaper to build which offsets modestly higher fuel costs) but longer term it seems unlikely to remain so, hence there's still interest in coal despite the CO2-related legislative risks.

Thus far, it's all unfolding as expected with the majority of Australia's natural gas (from all sources) seemingly destined for LNG exports and the remainder priced comparably. Domestic prices set by the LNG market whilst oil prices (which tend to be a benchmark for LNG prices) rise - gas won't be cheap if that occurs.

Oil and gas - both headed up in the future IMO simply based on supply and demand. Those producing oil/gas or alternatives (including renewable and coal-fired electricity) will profit, those consuming won't be so happy.

 

[oldblue]

John Durie (The Australian columnist) comments on the bid.

http://www.theaustralian.com.au/bus...n-rather-than-if/story-e6frg9if-1225838410329

 

[chops_a_must]

Chops, I am so glad to see you back here. Agree with your sentiment too. Far too cheap.
While I have your attention, I must thank you for steering me into csg in the early days. It was your initial research that directed many here on ASF to go for the minnows which became billion dollar takeovers. Thank you.

No problems at all Grace. Have had the family and told everyone I know to get into Arrow for as long as I can remember.

And in more recent times WA industry has been in crisis, and increasingly uncompetitive internationally, as gas prices soar...

As the deals are gradually scaled out of...