have hitachi and marubeni now 'downed tools'?, page-14

Acorn,

Does that mean that IK/ESG expects that Santos, at some stage, would pursue LNGN and hence would want to retain the land at Kooragang Island? If IK is surprised that the land would be sold, then it follows that he expects that Santos, if successful, would want to follow through on LNGN.

If this is the case, what does this say about the current 'deal' and its reasonableness?

The valuation for ESG was based on the 'current' 3P reserves, prior to any of the work done on LNGN. And so none of these 3P reserves incorporate export markets, Japanese customers, LNGN etc. If this merger is to be believed, then it indicates that all this progress has no value recognised in the proposed sale price. Is all that we have to show for LNGN the remnant footer on ESG's announcements to the ASX? I hope not. With export out of Newcastle, and more gas hungry projects in QLD than there are large independent resources, you would think that demonstrating a reasonable likelihood of a market shouldn't be that hard.

Finding a gas market in the current environment, both for export and for the burgeoning power-gen market, should be like finding a root in a woodyard.

Okay, perhaps ESG is required to have something more concrete in order to have gas certfied in 3P as a result of LNGN (state government approvals, MOU, completed bankable feasibility study etc.) - fair enough.

But even so, why would ESG be selling itself, at this point in time, to a company who does want to use the gas for export out of Newcastle and Gladstone, but does not want to recognise nor pay for that gas that will end up in an export market? Let us do all the work, secure the land, establish the relationships with the Japanese, get Hitachi/Toyo to do pre-feasibility work, then take us over and accord no value to the LNGN project. Have Knoxie come in at the final stage to sign the paperwork on GLNG.

Santos pays on the basis of just the domestic markets in our 3P, and then uses that gas in export markets..? Is this a good deal for ESG?

Is that why Santos alone, rather than GLNG, did the deal for ESG? GLNG buying ESG strongly implies a known export market, which could have reserve implications. Santos by itself buying ESG ... maybe. We will have to wait and see.

This is just another reason why so many people are gobsmacked at what is being presented as a deal. It is manifestly inadequate.

Yaq