Ann: Takeover Offer for Warrego, page-108

That will probably turn out to be the case, but.... what the merged entity will provide is a higher and faster cashflow, which will then create a more sustainable cashflow runway to develop the rest of the asset. Essentially, if this deal goes ahead, I'd expect them to be able to fast track the development of WE by building the gas processing facilities within the freehold land precinct, thus potentially expediting the EPA approval process. Phase 1 of WE should generate revenue of c.120mn, bringing total annual revenue to around 170mn. That will form the strong financial foundation for them to go on and develop SE and Haber. It's also worth noting that as its balance sheet risk reduces, so will its borrowing cost due to improved creditworthiness.

While the synergies will be negligible from WE's point, I expect it will become far more significant for development of SE as I'd expect them to design modular gas processing facilities so they will only incur some incremental cost to process SE gas (whether for Haber or gas market, or both).

As I had mentioned previously, the merger has always made sense. It's never just about the gas, but the holistic picture of how much better the merged entity can proceed from this point on.

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