Kerry Stokes' Seven Group Holdings has emerged as a thorn in the side of Mitsui, creating a real risk that the Japanese trading giant will fail to secure total ownership of AWE in its $602 million takeover bid.
Seven, which is allied with AWE's partner in the prized Waitsia gas field in Western Australia, Beach Energy, is understood not yet to have accepted Mitsui's offer for its circa 4 per cent stake as it considers its options and monitors acceptances of the offer.
Also holding out is dissident shareholder James Dunphy and his associates, in the stubborn belief that Mitsui's 95¢ a share offer undervalues AWE.
But the remaining investors in AWE risk being left with a minority stake in an unlisted vehicle given Mitsui has declared it would look to scrap the target's listing should it reach 75 per cent acceptances. The Japanese firm, which beat rivals Mineral Resources Ltd and China Energy Reserve and Chemicals Group to AWE, reported Monday it had further increased its interest to 74.34 per cent.
The offer, which was announced on February 5, was automatically extended by 14 days late last week after Mitsui gained just over 50 per cent. It is now due to close on April 18.
Mr Stokes argues that Beach, which is about 25 per cent owned by Seven, is better positioned as an existing low-cost operator in the Australian oil and gas sector to unlock greater value in Waitsia, an onshore gas field north of Perth which has the makings of a significant producer.
"I suspect the Stokes' interests will remain holders to enable further agitation in relation to management of Waitsia," said Mr Dunphy, who has declared he is "not accepting" the offer.
Mr Dunphy's opposition to Mitsui's offer is driven largely by the gas price assumption used by the independent export hired by AWE to value Waitsia. He has argued Mitsui need to offer at latest $1.10 a share for AWE, even though Mitsui has declared its offer final, eliminating any possible increase.
"I believe the gas price assumptions will be proven wrong and the expert's work will receive further scrutiny," Mr Dunphy said.
"Mitsui will face material pressure to take out the minorities at fair value and will likely struggle in the interim with the public spotlight and vocal minorities."
Macquarie analyst Andrew Hodge named the de-listing of AWE as the "key risk" for remaining investors given Mitsui's intention - outlined in its bidder's statement - to take the oil and gas producer private should it reach 75 per cent of acceptances even if it fails to reach the 90 per cent needed to compulsorily acquire the rest.
Still, Mr Dunphy pointed to "significant issues in terms of the best interests of shareholders" in the event of a delisting. "Let's see what the board slate looks like when they close the offer," he said.
Meanwhile, AWE and Mitsui, which work alongside each other in a New Zealand exploration venture, announced a deal to bring in two new partners, New Zealand Oil & Gas and its majority shareholder O.G. Oil & Gas (Singapore), into the onshore permit.
