odin assets, page-5

Though I wouldn't exactly put it in the same way Davo has, I'd have to say that I do agree with him to some extent. I can't really see the appeal in ODN. Given they have shown part of their hands in wanting to control VPE, it'd be more logical to consider VPE the better play. The short term play is always the prey, not the predator - unless they are going to succeed in executing the takeover and get an absolute bargain from the deal. I am disputing that their investment is VPE is bad. Far from it, I think they have bought in at a good price and a good time. However, the maximum they can hold if 19.9% unless they have ambition to takeover the company. If that is the case, I have no doubt VPE holders will want maximum takeover premium for their shares. Afterall, they have suffered long and hard enough through lots of hard times, and I can't see why they would want to depart with their shares cheaply just when the company is finally starting to make some positive inroads, with some long-awaited sunshine on the horizon.

Soooo... like I said on the VPE thread, ODN is going to have to pay a substantial premium to the current price if they do have takeover ambition - because (1) the current price does not reflect the value in the company asset (2) they are some serious potential in their CSG asset (even if they are yet to be fully proven up) (3) pay a takeover premium to persuade shareholders to commit to the deal.

Quality of the ODN management aside, I don't know much about the prospectivity of its Cooper asset, but it surely pales into insignificance when compared to those of VPE. As such, if ODN does want to takeover VPE via a scrip swap (minimum 3 for 1), it would mean that they are effectively paying a premium to VPE shareholders to vote in favour of a change in management, with the resulting post-takeover ODN/VPE entity dominated by VPE shareholders - rightly so too, if I may say so respectfully, given the quality of VPE's assets compared to those of ODN's. So if you're an ODN holder, it would effectively mean that your holding would be seriously diluted, but in return, you get some very quality assets to develop.

This deal could work very well for everyone concerned, if ODN management can better manage those assets and generate significant margin from their takeover price.

Put it this way, there's about 2.5MBO of rec from Growler and Wirraway. If ITC's technical team is correct and Warhawk confirms it, then we could have as much as 8-10MBO rec from that structure alone! Throw in the bits and pieces of reserves from Jingemia, Margarita, Flour Bluff, West Florence, the potential of 45% of 200BCF of 2P gas reserve by year end (with potential for several folds more in potential), and all those drillable prospects adjacent to discovered oil fields in good quality acreage everywhere.... not to mention the value of VPE's farmin deal with Santos for a 15% free-carried 7-well programme on the Barta and Wompi block... etc etc etc...

VPE has great assets (which is why I am long on VPE), just a hopeless management team to unlock the value in them. IF ODN wants them, I sincerely wish them all the best as I have enough Jan 2010 options to retire on if they succeed in unlocking the value in VPE's assets. However, before we get there, they will have to offer an attractive scrip swap ratio if they want to take VPE over.

At the end of the day, I believe VPE has the assets to generate significant shareholder value. If ODN management is capable of managing them and they are successful in acquiring VPE, then I believe it can be a win-win situation for all. However, if ODN does not succeed in acquiring VPE, then I see no compelling reason to invest in them based on their current asset.

Just my view of course :o)

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