lng

http://www.afr.com/digital_editions?pn=20120319-19

http://www.afr.com/p/business/companies/lng_chief_confident_of_westside_12nzv8kawDpckCd0d5AtRM

Liquefied Natural Gas Ltd boss ¬Maurice Brand says he is “quietly confident” of reaching an agreement on the $164 million takeover of coal seam gas explorer WestSide Corp.

But he is also negotiating on four other options for gas supply for his planned mid-scale LNG project in Gladstone, Queensland.

Market confidence in LNG’s conditional 65¢ per share approach to WestSide has been low but Mr Brand said that subject to successfully completing due diligence, he could pull off a friendly deal.

The price would, however, be adjusted to take account of WestSide’s $25.4 million entitlement offer, announced since LNG’s initial approach, he said.

“We wouldn’t have started the pro¬cess if we didn’t have a high degree of confidence we would be successfulbecause it does cost you a lot of money,” Mr Brand said.

“We are quietly confident, but we have not completed all the due diligence and one has to go through the process of negotiating and getting the support of the board.”

WestSide shares closed at 41¢ on Friday. The two-for-five entitlement offer is priced at just 25¢ a share. Mr Brand declined to say who is backing the proposed cash offer but US private equity firm EIG Global Energy Partners and others are believed to have held discussions with LNG .

LNG’s partner, China Huangqiu Contracting & Engineering, a technology-focused subsidiary of Chinese oil major CNPC, also “has endorsed the gas supply plan”, Mr Brand said.
The tilt at WestSide, which operates the Meridian CSG project west of Gladstone and other licences in the Bowen and Galilee basins, is driven by LNG’s need to find a long-term gas supply source for its Fisherman’s Landing LNG project.

Previous attempts by LNG to lock in gas supplies have been foiled by Shell and PetroChina, which together took over first Arrow Energy, LNG’s original partner for Fisherman’s Landing, then Bow Energy. LNG also has an agreement with northern NSW gas explorer Metgasco to investigate transporting gas to Gladstone.

LNG has hired RISC Consultants to carry out a technical review of WestSide’s assets, with an initial report due late this week. It then needs to check legal issues, decide whether to proceed and, if so, discuss a price.
“No question we are looking to provide a proposal that can be accepted and endorsed in due course,” Mr Brand said. “But there is some way to go.”

WestSide chief executive Julie Beeby confirmed relations between the two remain friendly, noting that LNG had declared it had no objection to the rights issue.

The takeover would not solve all LNG ’s gas requirements. It needs to lock in about 45 petajoules a year of gas for 20 years to proceed with the first 1.5 million tonnes per year LNG?train. The Fisherman’s Landing project is expected to cost $US1.1 billion ($1.04 billion) for the first train, including dredging and management costs, then another $US600 million for a second train.

“We’re trying to facilitate what they are doing just like they are not trying to hinder us,” she said.

Mr Brand said he is working on five potential gas supply arrangements in parallel, involving supply contracts, tolling arrangements and asset acquisitions.


Could BUL be one of the five potential???

Tammekand