bg: slow to shore up reserves, page-14

favre,

I'm not claiming my analysis is comprehensive, or indeed anything more than half-formed stream of consciousness writings. :)

But my basic thought pattern in determining attractiveness of takeovers is not simply market cap. It's a question of assets and potential assets vs market cap. 2 main points:

1. Bang for buck - Significant Reserves/Resources at a realisic market cap, preferably with synergies into existing projects.
2. Small enough to be a realistic takeover target for the Qld CSG-LNG projects.

This means a company that, by a takeover, will provide a significant Reserve/Resource upgrade to one of the Big Four without seriously threatening the bank balance.

Companies like COI or Blue fail #1 because they just don't have the assets. A company like AGL has some good assets but due to its diversified position and large MC is an unlikely takeover target IMO (even for Origin).

ESG and BOW seem to fit the bill, particularly BOW. MEL is a bit lean on the Reserves and consequently a bit higher risk - Santos, for instance, would IMO rate BOW ahead of MEL as a takeover target.

If I were to rank them in order of attractiveness, I'd probably go BOW, ESG, MEL. But obviously it depends on what the suitor's needs are. Because ESG is going to set them back a lot more than MEL!