patersons report, page-3

Paterson's take on ESG's takeover appeal:

Corporate Appeal

With a 19.99% equity interest and 35% interest in the Narrabri CSG project, ESG presents an obvious target for STO. ESG?s assets would sit well in STO East Coast domestic gas market strategy, however the question is when and at what price. The previous $1/sh price paid represents a floor in terms of pricing with upside to be determined by ESG?s progress towards demonstrating large scale tangible options for its gas. In terms of timing, an obvious parallel can be drawn between AOE drawing Shell into a bid and the recent progress achieved by ESG. STO is certainly capitally constrained at the moment but has flagged further sell-down of GLNG. We believe that NLNG would not appeal to STO as a development option, however the significant gas assets and control of the NSW market would be of significant strategic interest. Importantly the gas would add 2P reserves which could be potentially sent north to boost reserves required for a 2 train GLNG development."

The AOE comparison is one we have previously commented on here. The WHEN is the big question!

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