hi 618 here's some of the Euroz note from Bonnick
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Strike potential look-through value is $1268 million / $0.58/sh, compared to the current STX market cap of $819 million."
STX 1:1 WGO Takeover Bid;Hancock Eyes to Turn to STX?Key Points
·Strike has bid a 1:1all-scrip offer to acquire Warrego Energy Limited (WGO.asx). This follows theirprevious STX 1:0.775 WGO offer and the 1:1 share swap that was agreed with someWGO shareholders when they secured their 19.9% blocking stake and largest shareholdingof WGO on the 7th December.
·Could this be the pointwhere Hancock Prospecting exits the race for WGO and instead turn it’s eyes toacquiring STX instead? We will have to see whether STX’s bid is endorsed by theWGO board.
·In our view, WGO was thefirst takeover target for acquirers interested in the Perth Basin due to thelower cost of capital for the 50% non-operated interest of the 211PJ (2PReserves) at West Erregulla.
·We maintain our belief that all eyes will be on STX and itsattractiveness for major bidders due to its strong position with not only the19.9% blocking stake in WGO, the current best bid on an implied basis, but alsoa vast controlling position of gas in the Perth Basin.
·Hancock Prospecting andBeach have already shown their hand at their interest in securing Perth Basingas, while other major Perth Basin players such as Mitsui and Mineral Resourcesare yet to launch any bids.
·Woodside and othermajor North West Shelf LNG (i.e. Mitsui) participants could enter the fraylooking to secure gas for spare capacity at the LNG trains staring down thebarrel of being shut down. Santos is also looking to secure gas, not only tofulfil its existing contracts, but for its own growth, with the Perth Basinoffering relatively cheap discovered reserves.
Strike Look-Through Valuation
·The 1:1 bid implies a $1.82/GJ 2P Reserve gas-in-the-ground value, or a $1.69/GJ2P+2C value, as per our analysis below.
·Based on a potential~A$1.82/GJ 2P Reserve gas value, Strike’s look through is as follows;
- STX Greater Erregulla 2P Reserves (339 PJ) @ A$1.82/GJ alone
§A$644 million / $0.26/sh
- With the addition of Walyering (first gas Q1CY23) NPV10 @ A$155 million
§A$794 million / $0.33/sh
- With the addition of an implied A$82 million cash received from STX’s 19.9% shareholding of WGO ($0.25/sh)
§A$880 million / $0.36/sh
- With the addition of soon to be converted South Erregulla 2C Contingent Resources (271PJ) to 2P Reserves (drilling Q2CY23) @ A$1.82/GJ
§A$1395 million / $0.58/sh
- Strike potential look-through value is $1268 million / $0.58/sh, compared to the current STX market cap of $819 million.
I personally don't think we can or should use STX's own bid to calculate a look thro value for it. I mean, STX could theoretically bid something crazy such as $1 for WGO with some crazy implied see thro valuation for its own gas, when in fact, it has overpaid and should be value destructive to STX. I def don't think it's the case in this instance, but I think it's safer not to use one's own bid to value one's asset value.
(20min delay)