current offer significantly undervalues bow

Eastern Star Gas (ESG) was taken over for $0.50 per gigajoule 3P reserves only a few weeks ago.

Whilst I expected a cash offer to be less than a script offer (i.e. not taking on investment risk of Santos) Shell's current offer MATERIALLY UNDERVALUES BOW.

Shells current offer values the company at $0.15 per GJ of 3P reserves.

Valuation is as followed

OFFER PRICE: $520,500,000
LESS CASH:$94,000,000
EV: $426,500,000
Bow 3P Reserves (August 2011) 2,752,000,000 GJ
Price Per GJ of 3P Reserve: $0.15

If BOW is to receive the same price as ESG, the company should be worth in excess of $4.18 per share.

Valuation is as followed

Bow 3P Reserves (August 2011): 2,752,000,000
Price Per Gig in ESG Transaction: $0.50
TOTAL PRICE: $1,376,000,000
Plus CASH: $94,000,000
EV: $1,470,000,000
SHARES OUTSTANDING: 351,683,973 (including options)
Value Per Share: $4.18

Finally it needs to be asked why accept the offer now?

Any offer is likely to be base on CURRENT 2P or 3P reserves which are materially lower than managements 2012 targets.

What would the value of the company be if BOW's management (which I have faith in) are able to prove up 3P Reserves to 6,200PJ and 2P reserves of 1,250PJ.

Even if you assume the LOWBALL $0.15 per gigajoule of 3P reserves, a takeover target based on 6,200 values the company in excess of $2.64.

Calculations are as followed

Bow 3P Reserves: 6,200,000,000 GJ
Price Per 3P GJ: $0.15
TOTAL PRICE: $930,000,000
Plus CASH:$0.00 (assumes all cash spent on exploration)
EV: $930,000,000
SHARES OUTSTANDING: 351,683,973 (including options)
Value Per Share $2.64

I hope shareholders reject this LOWBALL OFFER which materially undervalues the company.