China National Petroleum Corp. subsidiary China Energy Reserve & Chemical Group (CERCG) has withdrawn its $430-million (Aus.) takeover bid for AWE Ltd., Sydney.
The unsolicited offer, made last week, proposed 71¢/share for the Australian resource company, a 30% premium on its trading price at that time (OGJ Online, Nov. 30, 2017).
CERCG’s Perth-based Australian branch said in its offer letter to AWE’s board that it would like to accelerate development of the AWE-operated Waitsia gas field onshore Perth basin using its expertise to supply gas across Australia. The company said it was concerned about a delay in the final investment decision for Waitsia Stage 2 as well as the apparent inability to secure sales contracts, the redundancy of some technical staff, and the expiry of the production licenses.
Although AWE did not reject the offer outright, the board’s initial reaction was that the proposal was not sufficiently attractive to provide CERCG with access to due diligence.
Analysts say that this rebuff possibly dampened the bidder’s appetite to continue with the offer. They added that the need for FIRB approval could also have been a factor because the Waitsia project is shaping up to be an important source of gas for Western Australia’s domestic gas market.
Prior to the bid, AWE had announced the completion of a successful test evaluation of the Waitsia gas field. In November 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 FID stage by yearend or early in 2018.
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.
