Life imitates art in the oil world
Monday, 7 November 2016
IT’S not often that life imitates art in the oil world but when Woodside Petroleum last week declared completion of its $US440 million ($A573.6 million) acquisition of ConocoPhillips’ Senegal assets Slugcatcher suspected he might be watching a scene from a movie – but which movie?
On one hand there was a hint of a classic comedy, The Mouse That Roared, because no sooner had the $23.5 billion Woodside declared victory than the $312 million FAR Ltd said “not so fast, we’re a player in the game too”.
On the other hand there was the potential for the Woodside v FAR dispute, which has ConocoPhillips as an interested observer, being a re-run of a scene involving a naked actress in the murder-mystery White Mischief.
In a way the story lines from the two movies are blurred in the Senegal transaction because FAR is definitely a mouse doing a bit of roaring and the best line in White Mischief is delivered from a bath when a naked actress asks: “Doesn’t anybody want to f--- me?”
In the case of FAR, most interest has been in whether it can match Woodside’s offer, though there is another issue yet to be explored and that’s whether FAR might consider an offer for its Senegal interests, or might even welcome a takeover bid – “doesn’t anybody want to buy me?”
In effect, FAR could be drawing attention to itself and what appears to be its undervalued 7c share price which Credit Suisse, an investment bank, reckons could rise to 14c over the next 12 months, and perhaps as high as 23c depending on how risk is valued.
As for the other movie, The Mouse That Roared, there is also a theme of wanting to be noticed, albeit in a more humorous way.
For anyone not familiar with the movie, or the original book of the same name, the Mouse in question is the Duchy of Grand Fenwick, a mythical enclave located between France and Switzerland which prides itself on a medieval lifestyle and its only export, a wine called Pinot Grand Fenwick.
Unfortunately, a US company released a rival wine called Pinot Grand Enwick, which drives the original out of the market, bankrupting Fenwick, which leads to a plan of declaring war on the US in the hope of losing and then receiving US financial aid to rebuild.
When no one notices Fenwick’s declaration of war an invading party is dispatched to New York, armed with bows and arrows, just in time to discover that the city has been evacuated for a nuclear war exercise which enables the Fenwick raiding party to capture a nuclear weapon, a prize which forces the entire world to take notice.
Eventually, Fenwick gets what it wants while keeping secret the fact that the stolen bomb is a dud.
FAR, in declaring that it has rights under its joint venture with Conoco that pre-empt Woodside’s deal, has effectively done a Fenwick and declared a form of commercial war which, in theory, could force the two big boys of oil to hear what the mouse wants – and possibly just buy the mouse.
Investors, so far, are ignoring FAR’s daring stance which was repeated last week when it reminded the market that it “believes a valid pre-emptive rights notice” has not been issued to the Senegal joint venture partners by Conoco which means it remains a player in the game.
Whether Woodside and Conoco are simply ignoring the mouse (sorry, FAR) is an interesting question though there is an equally interesting question in the timing of last week’s flurry of announcements.
According to stock exchange records Woodside started with a statement declaring completion of the Senegal deal with Conoco at 8.35am on October 31.
Three minutes later,
at 8.38am it announced an update on costs at the Wheatstone LNG project with that second statement winning the biggest headlines, diverting attention from the Senegal situation.
FAR was obviously not diverted because just over an hour later,
at 9.45am, it filed a report at disallowed reminding investors that it “continues to reserve its rights” in Senegal.
At some point Woodside and Conoco will be forced to deal with FAR, either through a variation of the White Mischief bath scene by acknowledging that someone is standing naked in the room, or by a Mouse That Roared variation by paying for the stolen nuclear weapon which, in this case, could be a pre-emptive legal right to be heard – or could be a dud.
Lights. Camera. Action.
(20min delay)