DYOR
This is my personal opinions and views.
I have no financial advisor licence or whatever.
Whilst I have no more knowledge than any other WCL shareholder, imho some things are pretty clear.
- the L/B offer of 40c is no where near realistic value. The fact that L/B achieved 19.9% is by luck, not because their offer of 40c is realistic. That EIT sold 11% to L/B to enable L/B to get to the t/o threshold represents EIT's poor judgement, and an L/B "Lottery win".
- why would anyone accept 40c which values WCL at $182m, when Petro proposal 2yrs ago valued WCL at $185m? And since the Petro proposal WCL has doubled its 3P reserves, it has executed a binding GSA worth gross $3.2Billion with impeccable counter-parties, it can call the shots re development, and now it has stated it can raise the funding for the development of the full 65tj/d production without the need to raise new capital?!
- when Petro made its proposal of 52c it equated to a value per gj of 3P. WCL announced the near doubling of 3P reserves during the period of the Petro proposal, and I calculated that, based on the price metrics of 3P reserves of that 52c proposal, that their proposed offer price should have been increased to over 90c ! Whilst it seems that the value of 3P reserves has dropped, it shows how unreasonable the L/B offer is. Particularly when you take into a/c the GSA etc.
- the fact that L/B has received less than 1% acceptances (if any at all) is clear evidence that 40c offer is a farce.
- we know the NHC cost of its 17.6% holding is somewhere near 38c level. Why would they accept a paltry 40c? NHC certainly don't need the cash!
- Why would NHC or any of us gift the benefits of the huge GSA to an opportunistic predator?
- those benefits appear now to be short-term, given we now have a new development drilling program of 6 wells already underway, with another drill program planned to begin in Sept 14. It seems clear WCL are intent on the rapid ramp-up of production to supply as much gas as possible to GLNG. With the Funding available in 4th Qtr 2015, WCL is on the cusp of generating significant cash flow.
- we know the 17.6% stake of NHC is pivotal
- we know the WCL thinks the 40c L/B offer stinks.
- we know that the WCL Board will not even give L/B due diligence, because their offer is so way off the mark.
- we can be pretty sure that the gap between the offer of 40c and the price at which NHC might accept is substantial, because NHC has not accepted, NHC has said nothing, and we can be fairly certain that NHC will follow the recommendation of the WCL Board. That stands to reason.
- why would we sell at a crappy 40c, when WCL has repeatedly stated that other potential rival bidders are in the wings? We know that is true, because it has been stated in writing several times.
- imho, the fact that no rival bid has emerged yet, is more a reflection of tactics than the value of WCL
- L/B has stated that next Friday 27 June they will detail the Status of Conditions. So confirm level of acceptances (if any). They will again probably Extend their Offer again for 2 weeks. They can keep doing that for a while.
- IMHO only, because they have not received any acceptances, they will probably go Unconditional.
- they will probably increase their Offer to 45c
- they will probably offer payment terms of 5 Business Days
- they will then then hope to pick up shares On-market.
So we s/h will have a decision to make.
Do we grab 45c and run?
Do we risk losing out on a higher bid, particularly when we know other potential players might be sniffing around?
Do we think Mitsui will be happy to allow an unknown, inexperienced opportunistic predator to grab controlling interest of their $3.2Billion GSA, and grab Operatorship of the J/V ???
Do we think NHC would be happy to see that situation arise ???
WCL is clearly in a totally different commercial situation now, to that of even 12 mths ago.
It is now on the brink of serious commercial development and serious cashflow. It is not really an exploration company anymore, but will be a serious gas producer within 12mths - with bluechip customers and a 20yr contract at terrific prices. There is still plenty of blue-sky for growth in their existing 3P reserves, plus Paranui next door.
It is a totally different investment proposition imho.
It is unique for such a small O&G company imho.
I ask myself, if I were to take a miserable say 45c, where would I put my money? A bank deposit at 2.5%? Hardly.has a hugeI personally will not entertain selling my shares even at 45c -- I would rather sit and collect the rewards of development in 1-2 yrs time.
WCL has now "boxed" all the risks.
Infrastructure
Management
Offtake
Pricing
Reserves
Funding
Production - the Validation Report we have been told confirms all of Mgt and Boards development plans. We have had stable production of 11.6tj/d for 9mths, with no new wells drilled over last 18mths. Also, why would experienced Santos/GLNG execute a $3.2B GSA unless they were confident WCL could supply the gas?
So upshot is, Landbridge, if you read this, you will not get my shares unless you make an offer which the WCL Board deems fair and reasonable !
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