have hitachi and marubeni now 'downed tools'?, page-61

Anthony,

I have a great deal of respect for your posts and always give them much attention and thought. But I found that one was so full of metaphors that I got lost. Sorry.

What I am really searching for is a believable answer to the 'WHY NOW?' question?

It is similar to Hardmano's email to DC and IK:

WHY NOW sell yourself, just before we get reserves from Hoskissons, after having waited 18 months for Tintsfield? Sell just before you get over the commercial threshold..?

WHY NOW, just before the Carbon Tax gets legislated? The ERM Power deal, seemingly delayed because everyone is waiting for commercial certainty... well that certainty is JUST over the hill, and we sell..?

WHY NOW, before other new gas-fired power stations are able to commit to GSA's? Like Origin's Kerrawary station.

WHY NOW, when you have done all that work on the LNGN project? Give up, without wanting any value based on an export market to be given to your company?

And, WHY THIS WAY? Why so passive, why so low, why not make Santos go hostile? Why not talk up your price, leak to the media that there were interested parties in discussions, get your base price up?

WHY NOT release the contingent resource upgrade which IS available after so much successful corehole drilling? Commercial flow rates + a large contingent resource = a large commercial field when it is developed. So why not upgrade your CR prior to any deal?

WHY NOT hang out for that 4mtpa deal that your corporate advisor, JP Morgan, puts a high value on? If ESG, as per their statement to the ASX, really have 'cracked the code' technically, then hold out for the deal to supply the majors, or make the majors take you at a similar price?

This is why it doesn't seem credible to me Anthony. ESG are not stupid. And neither are Santos. Santos doesn't buy a company for almost a billion dollars unless technically things are sound. And if technically things are sound, then all ESG needs is a market. WHY NOT demand a recognition for that market in the sale price?

The alternative theory being put forward for this deal is:

(1) The deal is not expected to go through at this price.

(2) It allows ESG and Santos to get from Point A, the starting share price, to Point B. Santos simple cannot go straight from 60-70 cents to Point B in one leap. It has to be managed upwards in a pallatable way.

(3) Establishing a baseline 3P metric that is acceptable to the market. Then the reserves up upgraded, allowing for an acceptable reason for an increase in the bid price.

(4) Agreeing to the merger allows ESG to demonstrate a market to NSAI. (As Ezirida, Monsters, DC himself and I have previously argued. The 'buyer is the market'. Remember that there is a benefit to Santos of commercialising PEL 238. ESG's reserves ugrade is also Santos' upgrade too. handy of you need to convince GLNG partners to buy ESG, or sign a deal for a 3rd Train. This deal confirms that an LNG market and has reserves implications. Remember STO on HC - Santos does want to use Gunnedah gas for GLNG. That equals AN LNG MARKET. That equals RESERVES.

(5)Agreeing to the merger forces the hands of other known interested parties. Santos and the GLNG partners may be happy to be a purchaser of ESG at a price, and Santos may be happy to cash in if the price is generous enough from a known third party.

The alternative is we are to believe that ESG just gave up..? ESG claim they have cracked the code technically. But then, they just give up, just as the market for gas is about to boom..? Before they signed a single GSA..?

I am really sorry Anthony. I have read and considered what you have said, and what other respected posters have said. But I just can't buy that ESG just gave up now, in this fashion. You may be dead right, and I may be dead wrong. But there are just too many things about this 'deal' that don't add up.

Yaq