move could force santos to show its hand

The AFR is also carrying the story about esg's CR today and makes a couple of valid points.

It says the CR could stir up action from its major shareholder Santos.

Analysts (whoever they are) said the raising and the acquisition of Kooragang Island site could prove a catalyst for Santos - a 19.9 per cent shareholder in ESG and owner of 35 per cent stake in several of esg's NSW leases - to make its long term intentions for the company known.

Santos does not have a seat on the board of esg, leading to persistant speculation that a move on the company could be likely.

Santos is also poised to approve the development of its 60 per cent owned 16 billion dollar gladstone lng project in queensland by year's end and could be interested in eventually feeding gas from esg acreage into gladstone.

It may be this that draws santos towards a decision on whether it takes the gas north and brokers some sort of agreement, or whether it even draws them into a takeover, said one analyst, who declined to be identified.

"I would think santos is probably more interested in getting this gas north to gladstone, which is definitely feasible, rather than exporting out of newcastle.

Santos, which learned of the capital raising plans only yesterday, exercised its right to maintain its 19.9 per cent stake.

*****

I reckon santos is just one card in the pack - but we will have to wait and see.

cheers,

B.