The directors got the message to keep Dave's little Wandoo feifdom on a leash pretty clearly, as there was a long discussion about whether the Wandoo agreement was commercial/arms length.
They also took a fair bit of poking about why an EFS sale has not occured. It seemed to me the unspoken reason was not that they couldn't sell it but that they couldn't get the price they wanted. The official reasons given by John were a) they have a #of small blocks b) some of the neighbours' results (eg swift) aren't as good as some of TXN's c) the irregular shape of some of TXN's leases & d) cash balances and the ability to respond in the event multiple offset drills are required
are all being combined in an attempt to negotiate a lower price. The directors to their credit have gone... ok ... instead of selling at a discounted price we'll simply address as many of the issues as they can. And they have = JV to square out the irregular leases, financial facility to allow multiple wells and plan more drills. Personally I thought this one of the strengths of the meeting ... but as usual simply poorly communicated.
And while I'm talking about communications - one of the RBS brokers asked John/Des if further announcements would be released in the next couple of days expanding on some of the topics. The answer was a non commital "maybe".
John openly addressed the issue of the mkt almost exclusively recognising the value of the EFS acerages and pretty much ignoring the rest = one of the core reasons for the proposed demerger. The demerger would be designed to leave the EFS in the head stock (read as shareholders to get pre tax $'s if a sale eventuates) and everything else would be swept into TexonII. Exisitng share holders would get a 1:1 holding in TXNII. I wondered if I should have asked if the directors would continue to do the same job(s) for the same amount ... just split over two companies. But then I'm pretty sure I already know that answer. Once I get past my cynicism though, I actually really like this idea! (the demerger ... not the dual directors fees!)
My take on the whole meeting was that they have had one or maybe two possible EFS deals fall over but because they don't have to sell they are holding fast to realise better value for the shareholders.Frustrating for all involved but not something I think they should be torpedoed for.
The quality & frequency of their communications on the other hand ... they got that message pretty clearly.
In any event I eventually voted in favor of all the resolutions but have changed my sentiment to a hold.
TXN Price at posting:
46.0¢ Sentiment: Hold Disclosure: Held
