canaccord comments

2245 GMT -- Sino Gas & Energy's decision to modify an agreement with Chinese state-owned CUCBM regarding its Linxing coal-seam gas project fulfils a key condition of private-equity suitor Lone Star. But it makes Canaccord nervous. Sino Gas yesterday said it would cede 21% of its interest in Linxing in exchange for an eight-year extension to its production sharing contract. While Canaccord notes that Lone Star's A$0.25/share bid for Sino Gas isn't subject to any Chinese approvals, CUCBM's consent is now needed if Sino Gas's China JV wants to assign any of its interest in Linxing. "In those circumstances CUCBM has a right of first refusal to acquire the interest to be assigned," Canaccord says.