the 200-300 faceless men (and women)

I would like to pick up on a post raised a few weeks ago by SeamFiend. Whilst it was an excellent post, it past almost without comment. It refers to The Annual Report, and the distribution of shareholders. And it is crucially important when thinking about the potential sale price of the whole company, if sold.

81.07% of ESG is owned by those who have 100,000 shares or more - that is, holdings valued at more than $92,000 each. There are 693 such holders, many of whom represent even few decision-makers. For every large holder of one sort or another, there are usually multiple entities in which shares are held - super, company, wife/husband etc. And of the institutional holders the same applies - lot's of entities controlled by few decision-makers.

So of that 693, there are probably 200-300 decision-makers who control the vast majority of this company's scrip. It is a tightly-held company indeed. And at the centre of that group are Directors and associates, who themselves are significant holders. So if it seems that many of the posters on ESG seem to know each other, do not be surprised. It is like the Masons around here.

And, that is hardly surprising. It is a 'specialty stock'. A fairly illiquid company who keeps its data close to its chest, in a relatively new industry that is not on the list of tax-drivers' favourites.

And this is a very good thing.

What it means is that these 200-300 decision-makers will need to be prized out of their holdings with dynamite.

This stock has gone through a GFC, and numerous corrections since then. It has been shorted, and bagged by its own shareholders. It went through a period when the forced sale of the 35% of Gastar's PEL 238 holding and the sale of HGO's stake threatened to prematurely kick off an auction. (and yet, HGO's stake was managed down just below 20%, and disposed of to a party (Santos) who themselves were not ready to attempt a full acquisition).

And yet here it is, one of the 'last of the Mohicans' - a giant independent resource not yet in the hands of a multi-national.

What does that tell you? It tells me that if a cheap takeover could have happened, it already would have. These figures that are bandied around of $1.30-$1.50, being the VWAP plus a percentage, mean very little. What we refer to as the 'market price', the half to one percent of shares that get shuffled around daily, is what is measured on the ticker tape. The 99% of shares that are not sold daily, the vast majority held by our 200-300 faceless holders, have an entirely different price. And these 200-300 holders know the value of the resource. They are 'high-conviction' investors.

The 'market' for ESG is the large players - LNG developers, large domestic energy companies, multi-nats. Santos, as we saw with QGC, is the new kid on the block, still in short pants, and saving up their pennies to try to compete. The price for these players to buy such a resource relates to the value of the resource in a full-field development scenario. So, if you cannot work out why you as a shareholder don't have all the data, or why people like Buddy don't get to see DC-10's undies, it is because the data is shown on a need to know basis. The potential customers, equity buyers or suitors for ESG get to see the data. The rest of us don't. And I am okay with that, because I am not a buyer for the resource - the big boys are.

So, whilst it is frustrating waiting for news at time, bare in mind that the game is now happening behind closed doors. ESG is not marketing to the wider market. It is marketing to those who matter, beind closed doors, those with deep pockets and a need for multiple trains worth of gas.

It is a good thing this company is tied up in the hands of 200-300 faceless investors. A very good thing indeed.

Yaq