pointers to a takeover by nzo at 50cps

Correct me if I am wrong people....

Following on from todays (actually yesterdays) announcement that FIRB have given approval for NZO to acquire all the shares (if it wants to) in PPP I have considered likely bids for PPP if NZO go for a full t/o.

NZO had $286m in the bank at the end of the last quarter with net cash flows of $25m. Debt free! NZO valued at $390m.

PPP had $150m in the bank (approx 25cps cash backing) at the end of October with net cash flows. Valued at $191m.

NZO presumably has >$300m at the moment in the bank.

NZO could make an all cash takeover for PPP at 50cps and still have $150m in the bank (PPP's cash) and 100% of Tui.

At the very upper end of bids, albeit IMO unlikely - PPP may ask for a bigger share of the pie for its shareholders. NZO could borrow $100m. Make a t/o at about 65 cps and have $50m left over plus 100% of the Tui cash cow.

A bid IMO would likely be at the lower end due to low oil prices and declining production from Tui (see page 9 of PPP's november presentation). The production profile drops off steeply after 2009 (when one may expect oil prices to improve) so the NPV of the remaining cash flows may not be that big. Any premium is likely to be determined more by exploration upside at Tui.

PPP had forecast $50m NPAT in 2009 based on oil at $US60 and an exchange rate of US65c. With oil prices starting well below $US60 forecast NPAT is declining by the day.

$0.60 I think is therefore unlikely. A bid is likely to come in at $0.50, maybe even a little lower at $0.45.

Anyone have anything to add that may increase/decrease the value of PPP?

I had a position in December which I exited just prior to it jumping up to 30c from 20c as I thought it wouldn't move for a month or two still - doh! Back on now and waiting for the next leg up.