Takeover bid coming from Linda cook?, page-85

KS,

Dollar value for any transactions in the O&G sector are based on 3 stages for any Operator.

Acquisitions made during Discovery phase, Pre-dev stage & Developed/producing stage. If the asset is too mature & is on the mkt then its incurs a low priced offer.

Field size in MMboe does matter, as do different sets of risks.

Examples of the later are the recent Lattice energy sale to Beach, Apache's sale of Wheatstone to WPL & the rest of its portfolio to Brookfield-Mqr consortium & Shell acq of BG's asset, Exxons's acq of InterOil's PNG assets. These sales incurred a premium.

Example of a Pre-dev transaction is the recent acq of set equity in 2 projects by OSH in Alaska.

Last one would b a low ball offer for a isolated discovery & a quick dash for cash by a seller depending on the price of oil at the time of the deal & timeframe/costs to first oil/gas (eg Karoon's Browse asset sale to Origin in 2014 when oil was 90/bbl which at today's price is recorded as an impairment by Origin, BHP's stranded asset at Scarborough & Thebe sold to WPL, Conoco's ageing asset auction in Alaska, sale in Natuna sea - Indonesia, its SNE discovery in Senegal etc etc).

In the past Santos have actually milked the commodity cycle quite well, when they sold assets to ENI (Evans Shoals) and SK Group (Barossa-Caldita) in 2011 & 2012.

So an M&A scenario depends on the size of the discovery, capital requirements for development & the current oil price environment.

Oil above USD90 or under USD50/bbl would attract a different dollar value for the asset & is clearly dictated by commodity price economics, urgency of a seller/buyer & to an extent debt situation of an entity.

Hope this helps.