China Energy makes takeover offer for AWE

Chinese state-owned China Energy Reserve & Chemical Group has made a $430-million (Aus.) takeover bid for Sydney’s AWE Ltd. AWE, which earlier this week announced the completion of a successful test evaluation of the Waitsia gas field in Western Australia, described the cash bid as “unsolicited, nonbinding, indicative, and conditional.”

Chinese state-owned China Energy Reserve & Chemical Group has made a $430-million (Aus.) takeover bid for Sydney’s AWE Ltd.

AWE, which earlier this week announced the completion of a successful test evaluation of the Waitsia gas field in Western Australia, described the cash bid as “unsolicited, nonbinding, indicative, and conditional.”

The offer, valuing AWE shares at 71¢, is a 31% premium over the last traded price on Nov. 29.

But the AWE board quickly pronounced the offer insufficiently attractive to grant China Energy Reserve access to the company’s accounts.

Last week AWE raised $38 million in a share placement to institutional investors and the company currently has a $10 million offer open to small shareholders as it moves to raise funds for its half share in the Waitsia development. The raising came hard on the heels of AWE announcing a 78% increase in estimated reserves at Waitsia which is expected to reach the final investment decision stage by yearend.

Beijing-based China Energy Reserve is a subsidiary of China National Petroleum Corp. It also is backed by the Beijing Municipal Commission of Commerce and China Economic Cooperation Centre. China Energy Reserve is an oil and gas trader as well as a provider of logistics, distribution, and supply services.

The proposal is subject to a number of conditions, including completion of due diligence, board approval, and clearance from the Australian Foreign Investment Review Board (FIRB).

Apart from AWE’s immediate reaction not to grant access for due diligence, analysts say the FIRB is a more difficult hurdle for the predator because the Waitsia project is shaping up to be an important source of gas for Western Australia’s domestic gas market.

AWE’s other assets include interests in the BassGas and Casino gas projects offshore Victoria and a 50% interest in the yet-to-be-developed Ande Ande Lumut oil project offshore Indonesia.

AWE has fended off two previous takeover attempts: a cash and share offer from Brisbane-based Senex Energy Ltd. late in 2013 and an unsolicited $421-million offer from US private equity fund Lone Star Funds in 2016.

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