Your and my discussions on here probably mirror the sorts of discussions ESG will be having behind the scenes with suitors.
ESG, naturally, want to have their resources recognised as a reserve if that gas is going to end up in an LNG project - a 'reasonable likelihood' of the gas finding a market is the measure. ESG want that market constrained project 3,000PJ recognised as having a market, which will give them a larger 2P reserve than QGC when they were taken out. And they want buyers to pay accordingly.
And the suitors for ESG, of course, don't. The suitors, despite the fact that they will use ESG gas for LNG export, certainly don't want to have to pay on that basis. They will be trying to argue that unless ESG have a viable export market of their own, they should only have to pay for the markets that ESG themselves have demonstrated. Typical cut-and-thrust of negotiations.
Hence why I described this thread as a Catch-22. ESG want to book a much larger reserve, but don't want to have to lock up their gas with one party in order to achieve that reserve. Maximum reserve, and maximum optionality.
I am sure ESG's suitors, a bit like you db, want to talk down LNGN. 'You guys don't have the money to do it, the return isn't that great ... ra ra ra'. Why? Because if LNGN is recognised as a viable alternative for the gas, then if another party wants ESG, they will have to pay accordingly. And Santos, Origin, BG, don't want to pay any more than they have to.
Suitors for ESG would really like to pay ESG domestic prices, and then use the gas for export purposes. Classic tyre-kicking behaviour from buyers. Talk down the price, and capture more of the profit themselves. And who can blame them? But ESG and ESG holders want to extract the absolute maximum out of the demand that exists in the market for extra gas.
db, I am heading overseas for a month in a few weeks and so will be offline. I shall miss our sparring. (take some leave if you want :) ) Now I want you to promise that, whilst I am away, you will talk positively about the value of ESG, and try not to naysay everything that other ESG supporters post. Can you do that?
And no sneaking in a low-ball bid before the reserves upgrade!
Yaq
ESG Price at posting:
57.0¢ Sentiment: Buy Disclosure: Held
