M&A

There is a resurgence in takeover activity in the Asia Pacific oil
and gas space and investors should brace for more, a market researcher
says.

Analyst Wood Mackenzie says more than $US6.8 billion worth
of global upstream oil and gas assets have changed hands this year — the
most since 2014,Santos’s (ASX:STO) $US2.2b acquisition of Quadrant Energy
activity in Australia has been led by local players looking to reshape
their portfolios to focus on domestic gas demand and future LNG backfill
options,” said Wood Mackenzie upstream research director Andrew
Harwood.

“We expect to see further liquidity down under, as north
Asian buyers seek to secure resources and private equity funds prowl for
overlooked opportunities.”
He also says to look out for deals in Malaysia and Indonesia, particularly after the latter’s election in April 2019
Only Santos operates in Malaysia, according to Makcorp data, but $728m market capped <strong>Cooper Energy (ASX:COE) and $7.8m marker capped Bass Oil (ASX:BAS)have operations in Indonesia.

The research house expects continuing Chinese demand for LNG, as it switches from coal to gas, will backstop Asian demand.
A dearth of new LNG projects mean globally companies will be
scrambling to get final investment decisions in on new projects and
existing producers will be looking for extra gas
This fact has implications for LNG producers on Australia’s East
coast, where LNG producers in Queensland are fighting for gas with
domestic users
The government’s Australian Domestic Gas Security Mechanism is in
place to force LNG project to limit exports or find new gas sources in
the event of shortfalls in the East coast market.
It also means juniors and mid-tier explorers-cum-producers like <strong>Armour Energy (ASX:AJQ), Real Energy (ASX:RLE), Comet Ridge (ASX:COI)> and Galilee Energy (ASX:GLL), which are scrambling to find and produce East coast gas, could be potential takeover targets.

Credit Rachel Williamson - *