Armour energy at centre of US - China tussle.

Link to article: http://www.theaustralian.com.au/sub...tory-e6frg9df-1227509849702&memtype=anonymous

Northern Territory shale gas play Armour Energy is at the centre of a tussle between Chinese and US companies keen to expand in Australia, with China’s Landbridge launching a hostile $37 million takeover bid designed to scuttle a $US100m ($142m) farm-in agreement with US fracking pioneer Aubrey McClendon.

The tussle comes as Armour tries to spill the board of the Gina Rinehart-backed Lakes Oil at an extraordinary general meeting in Melbourne next week, and will not help Armour’s chances of ousting Lakes executive chairman Rob Annells.

Landbridge, a private Chinese company who bought Queensland coal-seam gas play WestSide Corp in a $178m hostile cash takeover last year, has bid 12c a share for Brisbane-based Armour, a 76 per cent premium to the share price before the bid and a 94 per cent premium to the one-month volume-weighted average.

The bid is competing with a potential $US100m farm-in agreement with American Energy Partners, whose chairman and chief executive is Mr McClendon, the founder and former head of Chesapeake Energy, who sold BHP Billiton its first US shale gas ground.

Armour and AEP have signed a letter of intent to do the farm-in deal.

“WestSide (the Landbridge company making the bid) is offering Armour Energy shareholders a cash alternative to the proposed Northern Territory farm-out,” Landbridge said in its bidder’s statement.

“It is not certain the NT farm-out will proceed or, if it does, that AEP will be successful in commercialising the prospects.”

Armour, whose shares surged 5.7c, or 84 per cent, to 12.5c yesterday, indicated the board was unlikely to recommend the Landbridge offer.

“The offer is highly opportunistic and was delivered in the midst of Armour’s rebuilding strategy,” executive chairman Nicholas Mather said.

“The offer is conditional on the AEP deal not proceeding, which in my view underlines the desirability of those assets and the value of the AEP deal to Armour.”

Mr Mather advised shareholders to take no action on the Landbridge bid.

Adding to the fluid situation around the bid, Armour yesterday signed a $13m deal to acquire Origin Energy’s mothballed Kincora gas plant in Queensland and associated Roma Shelf gas resources.

Landbridge has not commented on that transaction.

Armour is a 18.9 per cent shareholder in Lakes and has requisitioned a shareholder meeting for next week designed to replace Mr Annells and non-executive director Barney Berold with Armour director Roland Sleeman as managing director.

Landbridge has given no indication of its plans for the stake in Lakes if successful with the Armour bid.

Mrs Rinehart, whose Hancock Prospecting also has a 18.9 per cent stake, has given her support for Mr Annells and nominated two more independent directors.