The differnce this time is, Santos took over a large portion of this deposit via aquiring Gastars 35% and HGO's 19%, giving them fairly strong control of the deposit. Unlike their previuos attempt at QGC where they had no control whatsoever. They are more than aware of the potential in this acreage, HGO knows it too, hence the top up clause. Santos will not let control of this deposit go, they are in bed with ESG and will know all the incoming data and every corporate move. IMO they are waiting for 2 things to happen, A. Sale of part of their assets, to give them the cash to make an offer, B. Rerating of the deposit to quantify the value to their shareholders to justify putting all their eggs in one basket, they have the marketing contacts throughout Asia and markets domestically, to pull the gas from one central high value resource makes total business sense. When you read between the lines that is why ESG are proving up unsold gas. Santos would have a "World Class deposit" all to themselves, they are in a position to controll the process going forward. Reading the news paper article from The Age (below) in 2006, and the words of Knox when he bought out Gastar and HGO, it is a very sensible business strategy they have implemented, if that is not what pans out in the near future, I will eat my hat and walk to Bourke barefooted. Read some of David Knox's statements when he bought out HGO and Gastar and read the article I have posted again re their attempt at QGC.
"What we have done here is another big strategic move, TO GET OUR FOOT INTO A REALLY HIGH QUALITY COAL SEAM GAS RESOURCE, WHICH PEOPLE WILL FIGHT TO DIE FOR AT THE END OF THE DAY."
"What we believe we have done today is a BIG MAJOR STEP for us in helping us get our foot on some VERY VERY HIGH QUALITY RESOURCEs IN THE GUNNADAH BASIN TO MATCH QUEENSLAND"
"Putting the whole thing together, very thick coals, clearly the gas that you can get from the coals as well, this is an extraordinary opportunity to get your foot on what is BY ANY STRETCH OF THE IMAGINATION AN ENORMOUS RESOURCE."
"In terms of oil, this is equivalent to circa 8 – 9 BILLION BARRELS. If you convert to oil terms, you begin to realise how massive this is."
"These opportunities don’t come around often, Mark, they really don’t. WE FELT WE COULDN’T LET THIS FISH SWIM BY without having a crack at it, and both Hill Grove and Gastar were keen participants with the support of Eastern Star.. I won’t die wondering"
The age newspaper Rod Myer October 6, 2006 Other related coverage
* STEPHEN BARTHOLOMEUSZ PNG pipeline project comes apart at the seams
SANTOS' $606 million offer for Queensland Gas Company may trigger a bidding duel, with investors lifting QGC's price almost 10 per cent beyond the Santos bid.
QGC directors told shareholders to sit tight after the $1.26-a-share bid.
"The bid corroborates the fact that QGC has over the past two years built an extremely important strategic position in the Australian gas market," the company said in a statement.
But Santos chief executive John Ellis-Flint said: "The acquisition of QGC is a logical transaction for Santos, and is consistent with our strategy to extend and enhance our core eastern Australia gas business.
"QGC's coal-seam gas assets are a good strategic fit with our existing gas processing and transmission hubs in Queensland."
Investors were asking what other strategic messages the bid contained. Some suggested it meant Santos was finally scuppering the proposed Papua New Guinea-Queensland gas pipeline.
Deutsche analyst John Hirjee said it was probably too early to make such a claim.
"That's a long bow to draw," he said.
"I'd make that assessment if Santos got rid of their PNG assets, but not now."
The $4 billion project was thrown into doubt recently when Australian Gas Light said it would not build the pipeline without more firm commitments from customers.
The statement was widely interpreted to be aimed at Santos, which had not signed up for gas but had expressed interest.
Mr Hirjee said Santos was consolidating its position in Queensland coal-seam gas. . Last year it spent $612 million buying 75 per cent of the Fairview exploration areas, close to QGC's investments.
Santos has moved on the fast-rising QGC while competitors Origin and AGL, which have coal-seam gas investments in the region, are involved in the Queensland retail energy privatisation.
The strong rise in QGC's shares, which finished 25.5¢ higher at a record close of $1.37 yesterday, implied "there was a little way to go" until ownership of QGC was finalised, Paul Taliangis, chief executive of advisory house Core Collaborative, said.
Some believe that rise may flush out bids from the likes of AGL and Origin before the deal is finalised. But Santos appears to be offering above the odds for QGC.
Its bid values QGC's 422.7 petajoules of reserves at $1.38 per gigajoule. That compares with recent purchases of 43¢ to 71¢ a gigajoule.
Santos needs gas to make up for its declining resource in the Cooper Basin.
Santos shares closed up 15¢ at $10.70, compared with the $13.47 high in January.
ESG Price at posting:
87.0¢ Sentiment: Buy Disclosure: Held
