triple in value, page-9

Acorn

In many ways, it is the most obvious thing to happen. ESG (and PEL 238) has all of that gas, and GLNG has a project with approvals and customers but not enough gas for its second train.

So, it is hardly rocket science to think that those with the gas get together with those with the customers. It is just that with no evidence thus far of a JV 'relationship', that looked to be less likely.

I think ESG has kept its 'optionality' as open as possible - it improves your negotiating position with Santos or with anyone else. But PEL 238's quantum of gas is so large that they can supply GLNG, do LNGN and their domestic opportunities.

Santos didn't spend $500m for no reason. They did so for either corporate reasons (takeover), commercial (to gain a supply agreement/gas swaps to GLNG), or as an pasive investment (very unlikely).

Now, we have had no JV commercial agreements thus far. But perhaps because that was ESG playing hard to get.... I sense a change in the wind, and Deutsche's valuation based on supply into QLD was almost certainly based on an ESG's briefing.

Whichever way you look at it, there are catalysts in the short-medium term for ESG. And the longer it goes without Santos signing a deal with Kogas, the more likely it is that this is linked with some sort of deal with ESG be it commercial or corporate.

Yaq