Fully agree but it can be presumed that in setting a revised offer price, AWE will reserve for itself a significant slug of the future benefit.
AWE would argue that the SP will fall away if it withdraws the revamped offer after ADI's response (I am guessing that this is a sighting shot to get ADI to reveal the strength of its defence knowing that this is a very difficult time - Hilcorp is nearing completion of the farm-in obligations and the CRs suggest that there may be advanced plans for the new programmes but it is possible that Hilcorp does not want to reveal them quite yet, which would be inconvenient for ADI to say the least).
If AWE pitches high enough, it will get the company, of course it will. The question is 'what price?'
My guess would be considerably higher than the current offer. We have seen risk completely scythed by Hilcorp's technical expertise. We've also seen wells producing a rates significantly exceeding much of the competition in the surrounding area. Those production rates could be significant to the recoverable reserves calculations.
Hold for developments is what I feel. Certainly until we see the ADI defence.
ADI Price at posting:
41.0¢ Sentiment: Hold Disclosure: Held
