"if "Santos have had similar problems getting approvals for their own activities in Gunnedah. " , why are they so bullish in their reference to esgs reserves in their own report ?
That is a good question Profitmonger.
I think the simple answer is, Santos has the size, the patience, the funding and the political clout to slowly work their way through the BOF Bureaucracy, and grow the reserves. ESG don't have that luxury. ESG would have to return to the market within 6-9 months to raise more money, from a share price base that was in the low 60s. Santos can play the long game. Juniors like ESG cannot. They need quick reserves upgrades to increase their share price, in order to allow for only modest levels of dilution when they return to the market for more money. (Or else, you end up raising more and more money, at even bigger dilutions, at lower prices. This viscous cycle tends to wipe out whatever modest reserve gains are achieved.)
This is the reason BOW are selling out. And look what happened to MEL and their capital raising in a weak market. They waited and waited for a JV deal, and in the end had to do a cap raising at a very low price indeed, which means big dilution.
The other answer I would suggest is, that once Santos secures this key resource in NSW, they themselves are next in line to be targeted. Ask David Casey, or the other Directors or Major Shareholders in ESG, whether they plan to sell or hold onto their Santos shares, and why... what upside in Santos scrip do ESG Directors see that other shareholders do not..? Ask Hardoak and his Group, or Dennis Morton or Doug Battersby, or Goldman Sachs, what value they see in a scrip deal with Santos. And the answer is not simply 'rollover relief'.
Sometimes, rewards comes in 'two tranches'. The first premium is the one ESG receives from Santos. The second is what happens soon thereafter to Santos. This is a 'double-play'.
Just my thoughts. DYOR. And speak to ESG personally about the problems, the challenges, and the potential upside of this deal. Ask them about the alternatives. Seek the opinions of other major holders who are voting YES, and gain their perspective.
Yaq
And you might also like to ask, HOW MANY ESG Directors and employees get cushy jobs with Santos out of this deal? ANSWER - NONE.
ESG Price at posting:
76.0¢ Sentiment: Hold Disclosure: Held
