This is a few days old but more interest in the PB.
Private equity firm Lone Star may consider a bid for Origin Energy’s half stake in the Perth Basin after AWE, the operator of the project, rebuffed an unsolicited $421m takeover offer for the oil and gas company.
Second round bids for the asset, which could attract offers up to $300m, are due next week, with a final decision in June.
According to sources, the Japanese giant Mitsui, which recently snapped up the offshore gas field Kipper from Santos, has waded in to the race, as has Transerv Energy. Pavilion Energy, controlled by Singapore wealth fund Temasek, has also cast an eye over the asset.
AWE could buy the remaining 50 per cent it does not already own, although such a strategy is rare in the industry given the concentration of risk.
Yet while some expect an offshore investor to win the deal, the bullish valuation predictions for Perth Basin come at a fortuitous time for AWE, after its board delivered a cold shoulder to an 80c cash offer from Lone Star Japan Acquisitions, on the basis it was too low.
It’s a stance that has gained support from some investors. Others insist a 30 per cent premium merits engagement, at the very least.
Yet if Origin succeeds in securing a strong bid for its stake in the Perth Basin, characterised in the sales document as a multi-decade gas project that could generate annual revenue of $100m, that would in turn transform AWE’s valuation, 30-40 per cent of which is accounted for by that asset.
While a final investment decision has yet to be made, demand for gas in the Pilbara region, and the opportunity to pump gas northwards in the Dampier-Bunbury pipeline, illustrates a diverse base for the Perth Basin reserves.
But gas supply is likely to swell in future years given offshore projects in WA, such as Gorgon and Wheatsone, are committed to pumping 15 per cent of reserves in to the domestic market
As with any takeover, both sides appear to be locked in a game of chess. It is understood Lone Star approached AWE on Monday and asked for its offer to be kept confidential on the basis it was indicative and unconditional. Others claimed there has been a debate about whether to usher the private equity firm into the race for Perth Basin, a move that could spur a higher bid for AWE.
Equally, some question whether Lone Star has swooped before the Perth Basin auction runs its course to capitalise on the volatile market conditions and persuade shareholders to capitulate in the face of a cash offer. Senex also made a bid for AWE in 2013 but offered scrip.
AWE has called in UBS for advice. But its presence has caused a stir in some corners as the bank is also acting for Origin in its sale of the Perth Basin stake. Citi is understood to be advising Lone Star.
