Wow - this transaction has the capacity to launch WCL into a new...

Wow - this transaction has the capacity to launch WCL into a new and bigger league.
I would have bet this transaction was out of reach of WCL, but clearly they have been working on it for a great deal of time.
I remember asking WCL about their intentions re these assets, and they admitted they had looked at it - but commented no further.
So we can be certain that they have done their homework!

The announcement is not clear on a few points, there are heaps of variables, but some things are apparent.

1. WCL may end up acquiring nothing. If Mitsui choose to exercise their pre-emptive rights over the Dawson field, then there is no deal at all. It seems then WCL will receive a break fee of $500k if this happens.
2. the most likely is that WCL will acquire the Anglo 51% of the producing Dawson CSG field which includes the PL94 and mining lease gas rights. It is not clear what this will cost.
3. the next likely is that Mitsui will choose to also sell its minority interest of 49% in that asset. I think Mitsui is a partner in the coal mine, so it is a fair bet that they will unload their 49% in the CSG assets.
4. the acquisition of Anglo's interests in ATP564 and ATP 602 are the least likely in my view. Molopo evidently has pre-emp rights. MPO has heaps of cash. I think their Mungi field there is going gangbusters. However, I recall that some of the fields in ATP564 and 602 were flagged as "non-core" by MPO. Cannot recall which assets though.

Financing.
Have got no idea of breakup of acq costs.
It seems that if WCL acquire all of above ie 100% of Dawson and the 50% of ATP 564/602, then the cost will be $80m.
The bottom figure WCL quoted was $55m, so I guess that represents the minimum case of WCL acquiring Anglo's 51% of PL94?
Remember, if BG (or someone) become a J/V partner the costs reduces proportionately.

Cost of Reserves
This seems to be highly attractive.
Am unclear of breakup.
It seems that the "Gas reserves of up to 62 PJ (1P), 212 PJ (2P) and 514 PJ (3P) to be acquired" represent those reserves encompassed in 100% of PL94 and 50% of ATP564/602.
If so, that will cost $80m? Therefore just using 514pj of 3P, it means WCL is paying just 15.6c per gj of 3P.
That seems a bargain! Which explains to me that MPO will not let their pre-emp rights lapse.
BG paid 40c gj 3P, but PES had really good acreage and big acreage. So maybe not quite comparable.
There would be all sorts of reasons why Anglo (and maybe mitsui) would sell at these prices.

Acquisition Funding.
I doubt very much that it will be all funded by a rights issue.
There will be a big proportion by way of Placement.
They have said there will be a proportional rights issue.
With the SP at 48c, then Placement and RI will be at a decent discount.
You can bet Bumi and SAAD will not take up their entitlements - because they declined to take up all of their Options.
We will probably be offered access to under-subscriptions.

Dilution
There s/be no problem regarding dilution.
Why? Because the way I see it, is dilution is only bad when the company does not utilise the new funds to enhance the value of that new capital at the same rate of the old capital. If existing s/h get RI then we participate at a similar rate - the only dilutionary effect is the discount given to the Placement - but we get the benefit of substantial new funds.
A big benefit of a placement, is that if it is widely placed, then the liquidity will be hugely improved.
If there has been one thing holding back the SP of WCL, its the liquidity of the market.

Asset benefits
I see the acq a huge boost for WCL. We get producing assets with contracts in place, existing infrastructure, abilty to commercialise any new discoveries (ie 3P to 2P) and probability of new power stations, because so close to Gladstone.

Please let me know what everyone else thinks.

cheers