Eastern Star Gas in Talks With Potential Asian Buyers (Update1) Share Business ExchangeTwitterFacebook| Email | Print | A A A By James Paton
Jan. 17 (Bloomberg) -- Eastern Star Gas Ltd. said it?s in discussions with multiple Asian companies to sell a stake in a proposed liquefied natural gas project in Australia?s New South Wales state and to supply fuel from the development.
The Sydney-based company aims to start exporting 1 million metric tons of LNG by early 2015, Managing Director David Casey said in a phone interview today. Eastern Star previously expected first shipments in 2014, a target that the gas explorer may still be able to achieve, according to Casey.
?We are in a dialogue with a number of groups, and the fact that we?re looking at placing smaller volumes of gas than many of our peers does open up more marketing opportunities for us,? Casey said.
Eastern Star is among energy companies in Australia seeking to tap rising Asian demand for cleaner-burning alternatives to coal. The explorer said in October it plans to offer Japan?s Marubeni Corp. a stake in the New South Wales project as part of a preliminary agreement.
Santos Ltd., Australia?s third-largest oil and gas producer, owns almost 20 percent of Eastern Star shares. In a list compiled by Royal Bank of Scotland Group Plc in September, Eastern Star was named as a potential takeover target.
Eastern Star isn?t currently in talks to be acquired, according to Casey.
?It would be for shareholders to decide,? he said. ?Be it Santos or any other group, if it?s a fair and reasonable offer, we?d put it to shareholders. From our perspective we believe we can deliver on our commercialization strategy, but at the end of the day we?re a public company and it?s a value proposition that?s going to be weighed by shareholders.?
Comparable Costs
Eastern Star declined 1.2 percent today to 84.5 Australian cents a share in Sydney trading, valuing the company at A$865 million ($855 million). That compared with a drop of 0.8 percent for the benchmark S&P/ASX 200 Index.
The Australian gas explorer last year signed an accord with Hitachi Ltd. and Toyo Engineering Corp. to study the development of the LNG venture in New South Wales. Eastern Star said in a statement today that ?recurring wet weather? in the Narrabri region of the state may further delay gas reserves upgrades.
The company anticipates costs for the proposed LNG project are comparable to a prior A$2.5 billion estimate, and potentially less, Casey said.
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Sounds rather like Casey is hinting that there "have been" takeover offers and although there are none being currently discussed he fully expects one or more offers! Otherwise why would he go on to say that ESG is confident it can commercialise its gas but ESG would put it to shareholders to assess the value of any offers.
Interesting!
H
ESG Price at posting:
84.5¢ Sentiment: LT Buy Disclosure: Held
