bow takeover, page-18

It is the second wave of consolidation - Gash Rush 2, if you like. Which was also predicted on this forum.

And the multiple moves were always going to coincide. Because once one major moves on one of the remaining independents, the pressure is on for a move on the other. High-stakes musical chairs. And no major wants to be the one that ends up without a chair.

db has argued that metrics are something that are applied post-facto, a justification after the event for the price that you are prepared to pay anyway. (I guess what he wants to push is that, even when ESG's reserves are upgraded, it doesn't justify an increased price, because the metric isn't written in stone).

In a strange way, I agree with him. There are no god-given reasons for a certain metric to be applied. The metrics are the by-product of the amount of supply and demand for that reserve and resource, and how many parties want you. A high metric reflects keen competition for a scarce resource; a low metric reflects that one party was not forced by 'the market' to pay any more than that.

And that remains my view - it is the market, meaning the majors, that determine the price of companies like ESG and BOW - multiple parties means a big result; a single party means a modest result. It is the the underbidder that forces the price up. One bidder, alone in a room, does not constitute an auction!

Santos won't pay the big dollars unless they have to. Nor will Shell. It is when majors go up against each other than the price and hence metrics are forced up.

So, the way BOW and ESG will get a higher price is not by referencing some pre-ordained metric, or even via an IER - if there is multi-party interest, their prices will by forced up; if not, they won't. And that was always going to be the way.

Yaq