my view, from exile, page-40

As a former large holder in ESG, I have empathy for the pain you must all be feeling.

I sold out of ESG when HGO sold to SANTOS as, in my opinion at that time, that deal took ESG out of play and capped its upside. It was a great deal for HGO and not such a good deal for ESG and now it has come home to roost.

If I was still a holder in ESG I would be furious at the board for accepting a 90c/share offer. Its a low ball bid. It does not stack up on the simple reserves metrics let alone that it does not include any premium for control of one of the last remaining independent CSG developers and, to quote SANTOS, "Australia's next major natural gas province".

This is a great deal for SANTOS and a rubbish deal for ESG shareholders.

I have difficulty understanding why the ESG board has accepted the SANTOS offer.

However you shareholders are now placed in a difficult position. SANTOS own a blocking stake which will make it very unlikely there will be a counter offer for ESG. If the scheme fails, SANTOS will still own a blocking stake in ESG and the permits which will continue to cap ESG's value and possibly cause problems at an operational level.

SANTOS have pre-sold a portion of the permits to TRU. Why? Because TRU are obviously a party interested in getting their hands on the gas and by pre-selling to TRU, SANTOS has removed a potential counter bidder from the equation.

SANTOS would have taken all this into consideration when coming up with its low ball offer price. SANTOS has never been a company to leave anything on the table for the other party.

Shareholders should also be furious with the Board for the direction they have taken over the past couple of years. The NSW LNG project has never been realistic. ESG should have focused all their resources on getting the gas to markets that currently exist and not pursuing a pie in the sky dream. SANTOS will place no value on the NSW LNG project so all that time, effort and money has gone to waste. SANTOS has placed no "LNG premium" on its value of the gas resources. Shareholders would have been far better off had ESG made real progress in being able to get its gas to Sydney.