State-owned China Energy Reserve and Chemicals Group (CERCG) launched a A$463 million (US$348 million) bid for Australia's AWE Ltd. on Dec. 8, going direct to shareholders after the gas and oil producer rebuffed a slightly lower friendly approach.
AWE said it would evaluate the offer of A$0.73 a share, pitched at an about 11% premium to AWE's close on Dec. 7 and 34% above AWE's close before the first bid was disclosed. It told shareholders to take no action.
Its shares rose to A$0.74 after the bid was announced, before closing at A$0.73.
The Chinese firm, which runs oil and gas projects and LNG plants, said it was attracted to AWE for its stake in the Waitsia gas field in Western Australia.
"It is for this reason that CERCG Australia is prepared to pay such a substantial premium for AWE," the company said in a statement.
CERCG decided to make a bid directly to shareholders after AWE's board shunned an earlier approach which CERCG had asked its target to keep confidential.
CERCG said after AWE disclosed the earlier approach last month it had received calls from shareholders who welcomed a bid and said the board should have allowed CERCG to look at the books.
"There has been surprisingly broad and widespread encouragement," said Eddie Rigg, CERCG's adviser at Argonaut in Perth, adding the firm had even heard from potential Waitsia gas customers.
He declined to name which shareholders had approached CERCG.
AWE's top shareholder is Ellerston Capital, backed by Australian billionaire James Packer. It owns a 13.1% stake.
This is the fourth offer that AWE has received in the past four years, but only the first one that AWE's shareholders will get to look at.
The offer remains well below Royal Bank of Canada analysts' valuation of A$0.91, based on the strong prospects for the Waitsia Field.
AWE rejected a A$750 million scrip-based offer from Senex Energy Ltd. in 2013, before oil prices collapsed, and a A$421 million approach from U.S. private-equity firm Lone Star Funds last year.
AWE is being advised by UBS and Highbury Partnership. (US$1 = 1.3307 Australian dollars)
Recommended Reading
Tech Trends: Halliburton’s Carbon Capturing Cement Solution
2024-02-20 - Halliburton’s new CorrosaLock cement solution provides chemical resistance to CO2 and minimizes the impact of cyclic loading on the cement barrier.
TPH: Lower 48 to Shed Rigs Through 3Q Before Gas Plays Rebound
2024-03-13 - TPH&Co. analysis shows the Permian Basin will lose rigs near term, but as activity in gassy plays ticks up later this year, the Permian may be headed towards muted activity into 2025.
To Dawson: EOG, SM Energy, More Aim to Push Midland Heat Map North
2024-02-22 - SM Energy joined Birch Operations, EOG Resources and Callon Petroleum in applying the newest D&C intel to areas north of Midland and Martin counties.
Range Resources Expecting Production Increase in 4Q Production Results
2024-02-08 - Range Resources reports settlement gains from 2020 North Louisiana asset sale.
Sinopec Brings West Sichuan Gas Field Onstream
2024-03-14 - The 100 Bcm sour gas onshore field, West Sichuan Gas Field, is expected to produce 2 Bcm per year.