open, page-38

Well, I strongly think market has good prospects of ADE.

Back to the old story when people suggested that BPT holding a 19.95% stake in ADE rules out other predators preying for ADE.

I had a thought on the weekend is that, this would prove false.

Reason:

Lets use an example, looks like all the major CSG/LNG players in QLD have consolidated and are eating up all the mid-tier players with large reserves. Eg. are ESG and BOW.

So MEL is the last one standing that has substantial reserves. All the other ones that are small would be useless for export of LNG, ie. WCL, BUL, ICN (unless they have a massive reserves booked, which is unlikely anytime soon).

I read in the AFR today, saying that LNG is in advanced talks for up 3 gas suppliers. Well MEL is one for sure, possibly WCL/MPO if they have any spare capacity for export, which I think is unlikely. Arrow Energy could still supply some spare capacity to Fisherman's Landing given that LNG is now 19.9% controlled by a CNPC subsidiary, and Arrow is also 50% controlled by a PetroChina. So could possibly be some possibility.

But anyway, back to the main story (or my theory). The BG Group move on DLS for shale gas in the Cooper Basin, suggests that other bigger players ie. Santos or under GLNG, Origin or APLNG, or even Arrow Energy may eye on a stake in PEL218.

Given that PEL218 has the most advanced shale gas project in Australia, any deal with BPT say for over PEL 218 can happen with ADE.

Lets say STO is the unlikely party due to takeover of ESG and Arrow as well due to takeover of BOW. So use Origin Energy in this case needed more gas (either CSG, shale, or conventional) for its APLNG project or domestic gas projects for power generation and wanted to say buy a 30-40% stake in PEL218 for $300m (as an example).

Immediately there could be a possibility that ORG would be interested in acquiring ADE as well due to these reasons:
1. increase its interest in PEL218
2. gain a 20% interest in ATP855
3. wants to dominate the South Australian gas market, as ADE back then bought ORG's Otway Basin assets, now with an underground gas storage facility, would prove attractive.

So in BPT's case, depending on the premium offered, BPT may be a willing seller at a excellent profit. Look at how BPT handled its DLS stake (if there is an profit opportunity it will take that opportunity).

So either way, ADE is going to be under BPT or another bigger player.