awe bid for adi

17/5/10 - AWE want to spend $47M to acquire the balance of ADI - they already have 33.79% (~34%)

bidding via Arc Energy

offering 40cps - a 43.3% premium to the 1month VWAP

why did they offer so much ?

Reasons given by AWE for the offer
- sensible rationalisation of AWE's corporate portfolio
(administrative ? save on listing costs)
- fits with AWE unconventional gas strategy
(shale field fraccing technology transfer ??)
- fits with AWE Yemen interests
(gives AWE bigger %)

good for ADI but no comment yet about the true $ benefit to AWE shareholders

Alternatives were to try and sell its ADI interests - maybe they did and there were no takers, or the status quo ?

If they have $47M spare cash that they dont plan to flush down a hole then they could give AWE shareholders a dividend of about 9cps

Just kdding ! - if you own AWE you know it is self liquidating like all oilers which fail to make any NEW discoveries - always that chance though (Gamblers Lament)

see ADI presentation 30/4/10

ADI has a 10% interest in the USA Sugarloaf with an contingent resources C50 estimate of 143BCF net - a tight gas plus shale field - expensive fraccing required , but ADI reckons net NPV of US$1.7M/well (full field development 235 wells, Oil US$100/bbl, Gas US$5/MCF). Bit of a stretch to extrapolate the NPV to all the wells ?

also a Yemen block 74 interest 8.5% - added to AWE 19.25% gives AWE 27.75%

So the AWE $47M is buying about 66% of (Sugarloaf 10% + Yemen 8.5%) or 6.6% of Sugarloaf and 5.6% of Yemen

We await further elaboration from both parties