As the OIP-ESG saga drags on, with no sign of responses from either company (via the ASX or privately), it is worth reminding ourselves just how valuable OIP's CSG assets are, to ALL parties, but especially to ESG.
At some stage, perhaps soon, ESG will have to bring OIP's assets or OIP back under the ESG banner.
For one, OIP holds valuable ground north of PEL 238, closer to QLD, and which contain extensions to ESG's own thick and gaseous coal seams. The most prospective areas, in the last 3 years, have not been drilled.
Two, the route of the proposed pipeline north, which links PEL 238 gas with the LNG markets in QLD would pass through OIP's PEL 6. Strategically important.
Three, what are ESG personnel and large holders going to do, after ESG is taken over? A: it is very likely they will 'do a Dart', and have the under-explored PELs spun out into a new company so they can continue in their area of core competency, which is upstream CSG exploration. As such, the OIP CSG assets in some form would ideally be re-consolidated back into ESG (probably soon). (Yes, all those most prospective areas which were not explored under OIP (despite them having the cash to do so) would likely become the very first targets for the new company).
Four, consider why ESG, now (as opposed to at the time of the GGX merger), are concerned about dilution of OIP's shareholders with the Energetica proposal. ESG were quite happy, it seems, to allow OIP shareholders to be diluted by the cash-strapped GGX. In fact, rather than ESG sell the merits of this previous GGX proposal, ESG were decidedly evasive about their tacit support for this most conflicted GGX proposal. Hardly surprising. It was undefendable.
And why are these OIP CSG assets so strategically important? Well, just imagine if they were to fall into the hands of someone like Santos/GLNG ... just imagine how dominant a landholding Santos would have if Santos got control of OIP. They truly could claim to be the 'basin-master'. A truly dominant position in NSW.
Just imagine if OIP was negotiating with Santos or GLNG, to vend their CSG assets... which is exactly what an independent board who were driven to maximise OIP shareholder value should do. Or speak to AGK. Or TRU Energy ... also likely buyers.
Wouldn't that force ESG to pay OIP holders what they deserve?
At some stage, I am sure, a takeover bid or acquisition of OIP's CSG assets will be made by ESG. This may happen closer to the time, or even coinciding with ESG's own takeover. (which is probably why ESG is currently stalling for time* - it is not that ESG don't want OIP - they just don't want them YET).
If ESG want to get OIP, without too much fuss, then they should pay (at a minimum) what OIP was floated at. Because despite the conventional exploration being dusters, there is greater demonstrable value in OIP's CSG assets than ever.
Yaq
* Notice that ESG have not actually rolled the OIP board yet and installed their board members. They have just threatened to. because were they to actually replace the board, then an ESG takeover or purchase of OIP assets would be conflicted. So ESG threaten, they stall, and they prevent OIP from entering into any other deals (eg Energetica)... until ESG are ready...
OIP Price at posting:
6.0¢ Sentiment: Buy Disclosure: Held
