Not really. Obviously, if another bidder such as BG enter the fray for Arrow, it will stoke the entire sector. But the absence of a second bidder means little for ESG.
Someone posted some analysis about how there seemed little continuity between metrics paid for CSG companies, whatever your preferred measure; 2P, 3P, or on a contingent basis. True. Each deal is unique.
Big metrics tend to be the by-product of competition for a company or a resource. There is no god-given reason why ESG or anyone else will receive the average metric of past transactions. Majors don't pay $2.78/GJ of 2P because they want to - they pay this because they are forced to pay it in a competitive market!
So whilst some might like to point to the current Arrow metric as evidence of something, the reality is it is evidence of nothing. I could just as easily point to the deal between Origin and BG for gas sales at over $6.00/GJ of 2P as evidence of the 'current price' for CSG gas.
It means little. The metrics are a guide to value, but they are not written in stone.
If ESG gets a multi-party auction, because there is strong demand for their massive resource from Australian and international companies, they will get a big price. If not, if there is only one interested party, they will get a nice increase but not huge.
I personally think there will be another bid for Arrow. Arrow have agreed to these terms suspiciously quickly and easily. They have done so because they know that were they to reject the bid, their price would collapse, as it did before. Instead, by agreeing, subject to a better offer, a better offer will come.
But whether the "lions have scared away the hyenas" in the Arrow case, it has little bearing on ESG's future. That will be determined by the number and keenness of the suitors for ESG.
Y
ESG Price at posting:
88.5¢ Sentiment: Buy Disclosure: Held
