In the FR: AGL Energy chief executive Michael Fraser says the company could join with Royal Dutch Shell in a future Queensland liquefied natural gas project if the global oil and gas giant snares control of Arrow Energy.
Now, why wouldn't AGL join Arrow? Most likely because of the huge capital expenditure required and AGL does not want to fork up too much partnering with a poor AOE whereas Shell's pocket is deep enough to carry AOE's projects. So if there is no rival bids and Shell does not make a formal takeover bid, AOE will be back facing the same old cash dilemma and the share price could easily slide back to $3. While it is good (but a bit wishful) to think AOE is worth $7, $8 or even over $10 now, AOE must be able to demonstrate to the world that it can stand on its own two feet first. I have faith in AOE pulling this one off, although it may have to go through some tough times initially. As a shareholder from the initial float, I am patient. I don't want Shell or anyone else taking over AOE now. I would rather wait 2-3 years and receive my well-deserved dividend cheque While AOE is about $20/share.
AOE Price at posting:
$5.06 Sentiment: LT Buy Disclosure: Held
