Central Petroleum's hopes of eking an improved bid out of suitor Macquarie Group appear to have suffered a setback after French oil major Total withdrew from an onshore exploration joint venture.
Macquarie is finalising due diligence on Central, embarked on after the junior's board rejected a 17.5c a share offer in November.
Arguably Central's argument that the bid undervalues its portfolio would have been stronger had deep-pocketed Total elected to continue with the unconventional exploration venture.
It is in the remote Southern Georgina Basin in the Northern Territory.
The market had high hopes for the alliance between the two when the original joint venture was signed in November 2012, worth up to $US190 million in all.
But Total has elected to exit after the initial $US60 million phase (which was subsequently expanded by $US35 million), rather than proceed to invest more.
That investment would fund exploration in around 6 million acres of ground in the NT/Queensland border area.
Exploration had been expected to resume next month after being suspended since March last year.
That leaves cash-strapped Central with 100 per cent of the acreage again and less of a bargaining chip with Macquarie, which is also its major lender.
Macquarie appears to be positioning itself as a potential key supplier of gas to the tight east coast gas market, having snapped up Santos's half-share in the Mereenie field in central Australia in December. Central owns the other half of Mereenie among its vast acreage holding.
Central's shares closed on Monday at 17.5c, on a par with the Macquarie offer, which values it at about $76 million.
Central Petroleum's hopes of eking an improved bid out of suitor...
Add to My Watchlist
What is My Watchlist?
