takeover or gsa, page-22

I can see where the 42c figure comes from.

L/B is suggesting (as a starting figure) 36c per share.
with 445m shares values WCL at $160m.

back in 20 Nov 2012 WCL received a t/o proposal (later revealed to be Petro) of 52c p/s. At that time WCL had 356m shares. So that bid valued WCL at $185m.

If we take the Petro proposed offer of $185m for 445m shares, that equates to about 42c p/s.

But that discounts:
a) that the Petro offer of $185m was adequate.
b) but more importantly, ignores the issue that WCL is far, far more valuable now, than it was over 18 mths ago!

why do I think that?
- WCL has been producing at about 12tj/d since then. they stated that was their goal. not looking to increase prod further - presumably because why produce and sell more gas into a AGL contract at about $3.50/gj, when you can hold it,, and sell it for about $8.00/gj in 2015? and WCL already has provided for the liquidated damages in their b/s.

- when Petro made their proposal of 52c, WCL had 258pj of 2P, and 725pj of 3P. Now WCL has 347pj of 2P and 777pj of 3P !!!! So that's a 34% increase in the all-important 2P reserves in that 18mths.

- since Nov 2012 gas prices have risen from about $5-$7/gj, to somewhere between $8 - $12/gj

- LNG projects are now evidently short of gas, whereas 18mths ago that shortage was not so evident

- domestic producers are now screaming for gas

- WCL says it has the production issues resolved. And if material GSA is executed with an LNG project, you can guarantee that they would have done extensive d/d on Meridian before they committed to a multi $Billion GSA!

- WCL now has received the Validation Report from independent RISC experts, which evidently confirms the WCL figures and field dev't plans.

- WCL has continually stated that a major GSA is imminent.

- funding for the field dev't to fund the supply of gas to fulfil this new GSA will be forthcoming, and imho, it will be easily obtainable, and on attractive terms. Simply because of presumable strength of GSA partner, strong financial metrics of GSA, strength of WCL assets (ie in-house infrastructure), proven mgt, strong cornerstone s/h, and strength of Validation Report.

- if as alluded to in AFR article, the material GSA is such that the customer will take all the gas WCL can produce, in a staged production time-frame, then WCL will simply not need to come up with huge funding in one hit. So no massive s/t dilution.

- no other big uncontracted 2P reserves

- closest to Gladstone

- any GSA partner will get ALL of Meridian output ie also gets Mitsui share of gas.

- at Petro's $185m and 258pj of 2P = 72c /gj of 2P. If we now have 358pj of 2P, then the Petro metrics equate to an equivalent offer of $257m or 58c p/s!!! (358pj x .72c / 445m shares).

so all in all, 36c is silly, and gets them no where.
42c is just marking time. Supply environment and market has significantly changed.

imo, any offer for WCL would need to be well in excess of $250m.

cheers