ESG don't want to takeover OIP. Why bother? Too messy (and beside, as GGX found out, there is always someone, (in that case OXX), who are going to get in the way.)
ESG couldn't care about OIP's $7m in cash either. Small beer. What ESG care about is the CSG assets. They are worth a hell of a lot more than $7m, especially once they are fully explored.
ESG were quite happy to let OIP bail out Dennis' cashless GGX with OIP cash (probably on the understanding that GGX would keep the CSG assets in trust and unexplored until ESG were ready, and then agree to sell the CSG assets back to ESG for a fixed price. And GGX gets the OIP cash to fund their high-risk conventional plays). WIN-WIN? Until OXX got in the way.
So what is the bet that this Gulf Of Mexico venture is exactly the same? No synergies with any existing OIP asset. OIP pays for the assets. OIP's cash is used to explore the assets. And the owners of these GoM assets gets someone else to pay. Nice. Or as OIP says about the conflicted ownership of the GoM assets, "a range of parties currently or formerly associated with Orion, have an interest in the assets the subject of the alternative proposal." Blinky's fingerprints are all over this one.
As for the drilling of OIP CSG's assets, vaguely planned for some time 'mid-year'..? It won't happen. It hasn't happened in the past 3 years, so why would it now? What is more likely to happen prior to ESG themselves going up the foodchain is that ESG will make OIP a lowball offer for the CSG assets (which will be accepted, of course). I can hear it now - OIP will then say, "we are divesting these non-core coal-seam gas assets to ESG to concentrate on our core business which is conventional O&G exploration".
Sure, OIP's price goes up as these assets are finally given a monetary value (currently almost zero). But as many OIP holders know, this will be a fraction of their true worth.
And the Independent Directors seem to be so independent they lack any independent views whatsoever! In their own words, "Orion is not opposed to the alternative (or any) proposal". So the OIP shareholder has to choose the option Blinky and ESG want you to choose. And the Independent Directors fold like a weak hands of cards. Gee, thanks guys for defending the interests of OIP shareholders.
The owners of the GoM asset will be happy, ESG will be happy. The only losers are the hapless OIP shareholders who become another victim of the poor corporate governance at the small end of the market.
OIP Shareholder's CHOICE:
A: Use OIP cash to buy and then fund exploration of Asset A, and then sell our valuable CSG assets to ESG for a pittance, OR
B: Use OIP cash to buy and then fund exploration of Asset B, and then sell our valuable CSG assets to ESG for a pittance.
Just tell us where you want us to stand, Blinky (and ESG), and when you want us to touch our toes. Again.
Yaq
OIP Price at posting:
6.0¢ Sentiment: Hold Disclosure: Held
