Hi all, About a month ago, I speculated there'd be a 1000+ posts...

Hi all,

About a month ago, I speculated there'd be a 1000+ posts guessing our way through to the inevitable corporate outcome.

Man, was I wrong. More like 10,000. Here's my monthly contribution and its about India.

I know nothing really about the Indian O&G scene but I believe it, indirectly, has a great influence on how any M&A plays out over the year or so. Putting COP aside for now, any (major) third party wanting into this project will only (likely) look at CNE with its meaningful 40%. And its fairly easy to see that CNE by itself represents a value play (Blackrock increasing their position here). Roughly, its a A$2b mkt cap, with A$1.1b cash, 2P of 56mmbbls...BEFORE even considering any value for Senegal and their current 2C of 171mmbbls. By almost any metric, CNE is undervalued and if the UK assets and cash are netted out, I'd dare say better value than our FAR.

However...and before loyal posters bring their verbal swords to slay this blaspheming traitor...Its the stink of the potential Indian liability that is very real. Especially for many of the majors. Shell, Chevron and others with meaningful assets already in India are very likely to give CNE a wide berth until this issue is cleared up...which appears highly unlikely within the corporate shooting window for our FAR duck. It just doesn't make sense for any of them to put at risk any of their existing Indian assets over a third party retrospective tax fight with unknown (well US$3b ish) potential liability.

So when considering this game of corporate cluedo, those big boys with no Indian assets are likely to favour looking at CNE for size. But honestly, elephants like Shell, Chevron etc don't play by normal rules. I'll bet that several of the big boys have already had very quiet discussions with the India Tax Office about a set deal conditional upon successful T/O of CNE. That's how that world can and does works. Yet India moves too slowly so I doubt this concurrent strategy will be able to get up in time...but I'm sure some are trying.

This tends to increase the spotlight on our minnow....even for COP who needs (would very much like) the majority stake for operatorship. While COP could swallow CNE for lunch with very little reflux, I doubt they would do it for the simple industry maxim that majors share risk in major ($10b+) projects and I just don't see COP taking a 75% stake. I think COP would actually like to see another elephant in the room; to help bring political, technical, financial and supply chain leverage to what is likely to be a very large and hugely important energy province. These are very tangible assets that CNE just doesn't have.

The follow on from this unsubstantiated thought bubble, is that COP will be trying to manoeuvre its favoured mates into the position. So the next topic of guess-work....Who would be COP's best bed partner in Senegal?

But first and IMHO, COP's just gotta get to that all important 50%...I now think its even possibly before appraisal results.

9,999 to go?

Cheers