ned kelly pricing

Ned would be smiling at the legalised larcency being attempted by Shell and China Inc with their bid price for AOE.
BG paid twice as much for Queensland gas in 2008 and Conocco Phillips stumped up four times the price placed on gigajoules of discovered gas when it bought into Origin Energy and neither of these plays were as well advanced as Arrow is in respect of establishing an LPG gasification plant at Gladstone.

AOE has the State approval of the pipeline route which means it has cleared the hurdle of having an ILUA (Indigenous People Land Use) agreement with the traditional fmilies in the area of the pipeline traverse.
Shell tried a $3 billion buyout at the height of the GFC and it became stalemated.

Then of course there was the BG trumping of the Arrow play for Pure Energy resources which also put a price on the probale gas of four times what is being offered as sucker bait at the level of the present bid by Shell for all of the domestic assets of AOE.

The international business is valued by analysts at $400 million or 55 cents per share so at a price of $5.10 sellers are not placing much premium of the comparative value of Arrow.

The size of the funding most probably means that Arrow would find it difficult to carry funding without tremendous dilution and if the Chinese are again kicked in the teeth there may be some problems selling gas into that market in time to come as Arrow does not have any off take agreements in place which places it at a disadvantage relative to BG and Petronas who have signed on for the delivery of various sized trains of future gas.

All things being equal which they rarely are with the emergence of shale gas in bountiful supply has created another risk factor (Qutar the largest exporter of natural gas has quarantined expansion in light of the emerging threat)

However my research places a minimum price of approx $8 per share for the domestic and 55c for the International assets. I will sell at $8.55 as fair value.