media coverage on nsw and csg, page-59

I agree Nervous. We should get some value for Tintsfield and the Hoskissons seam. And the Scheme of Arrangement is a terrifically slow mechanism. Does this buy ESG time for the Tintsfield pilot to get over the commercial threshold? We will see.

It seems an odd structure for Santos to choose, don't you think? If you were Santos, wouldn't you choose a quicker method, rather than one which takes months to play out? Why not secure ESG sooner rather than later..? Some takeovers, especially where one party is starting from 24% of the shareholding, can be over in a matter of days...

This will take time to play out. Have a read of what ESG says:

"production from Tintsfield has increased steadily from the onset of gas production the Company's independent Reserves Certifier (Netherland, Sewell and Associates, Inc.) has confirmed that there is not yet sufficient data available from the Tintsfield pilot alone to warrant an updated reserves report. Mr David Casey, Managing Director of ESG, said "Commencement of operation of the Tintsfield Pilot was an important step forward for the Narrabri Gas Project because the pilot opens up a whole new gas reserves horizon. But initial production rates have not turned out to be sufficient to support a meaningful review of gas reserves. A steadily increasing production profile and evidence of good connectivity between the wells is encouraging, but it is too early to say more."

So,

- there is GAS production (not just water)
- the gas production is ramping up

Interesting, don't you think? It is almost as if ESG are expecting more time for their takeover to play out and hence for the Hoskissons seam to become a factor.

Then, have a look at what the current deal actually does:

- It provides a lift in the share price from the low 60s where it was previously
- It insulates ESG's share price from further large falls, linking it with Santos'.
- It takes some months to go through the various steps
- It locks in a metric that is acceptable to the market.
- It allows another couple of months, during which Tintsfield continues to increase its flowrates, AND

- Does this agreement have reserves implications in its own right? Does it provide NSAI with the evidence that there is a 'reasonable likelihood of the gas finding a market'?

I DO expect intervention. And I DO expect ESG to get some recognition for the Hoskissons seam. But my position is the same as ESG's - I support the current deal, in the absence of a superior offer. The message is clear - ESG is on the market to be sold.

Yaq