Aus AWE Backs New Takeover Bid

Oil and gas producer AWE has backed fellow Australian company Mineral Resources’ (MRL) takeover bid, beating China Energy Reserve and Chemical Group (CERCG), MRL and AWE said December 21.

The implied value of the deal is A$0.83 ($0.64)/share and was unanimously recommended by the AWE board. It values AWE at A$526mn ($403mn).

The offer represents a premium of 52.3% to AWE’s closing price of A$0.545/share on November 29 – the day before the disclosure that CERCG had approached AWE.

MRL and CERCG were attracted to AWE particularly due to its interests in the Waitsia gas project in Western Australia, where AWE earlier this week increased reserves.

“The acquisition of AWE, including its 50% interest in the Waitsia Gas Project, is logical and on-strategy for MRL. MRL has a strong desire to develop this tier one gas asset to form a key pillar of the MRL business over the next 20 to 30 years,” MRL CEO Chris Ellison said.

On December 19, AWE upgraded the 2P reserves for Waitsia, which Origin Energy also holds a 50% interest in, by 80% to 820 PJ gross – with 410 PJ net to AWE. MRL has previously indicated that its share of the gas from the Waitsia project will remain in Western Australia.

“MRL does not currently intend to sell any gas from AWE’s Waitsia Gas Project offshore as it is committed to supplying domestic gas in Australia and is a large consumer of domestic gas in its own right, with such consumption to grow considerably,” MRL said December 11.

The deal remains subject to certain conditions such as approval from AWE shareholders. They will be asked to vote on the scheme in April next year with the implementation date set for early May. MRL is a mining services and processing company, with decades of experience in the mining services sector. AWE also has stakes in the Casino and BassGas projects on the country’s east coast.