Takeover Bid Issues, page-4

AWE has seen this 'offer' scenario & SP spike/drop play out many times in the last few years.

- Dec 2013 Senex offer for $1.44 with 522mil shares on issue.
- May 2016: Lonestar offer for 81c with 526.7mil shares on issue.
- Nov 2017: CERCG's offer of 71c with 605.24mil shares & net debt of 64mil.

With low shares on issue, they are running a tight ship & have sold Assets to keep Debt in check.

So far sale of AAL, Sugarloaf, Bassgas/Trefoil, Tui has generated apprx 464.5mil USD & sale of Cliff Head and Lengo made them apprx AUD 30.719mil. Which explains the current low Net debt at $64mil (gross $81 mil, cash $17mil).

From the existing portfolio, Waitsia is their key asset that should generate Cashflow, once they get Stage-2 up & running at some point in time alongwith new Gas Sales Agreements. Their JV partner may also have pre-emptive rights for Waitsia.

Unknown for now is the overall net cost involved for that stage, which is why the FID is important & once that's known then they can either do a placement to Soph's/insto's & existing sh'hldrs etc etc.  

Revenue over the past 5 years has tracked Production & POO from $301 mil, 328 mil, 284 mil, 203 mil & $103.6mil from 5mmboe to 2.75 mmboe.

Ebitdax was $41.1 mil (apprx 40% of the Revenue) for last FinYr & in the current financial year its should b somewhat same. So the point is can the AWE Board get a better offer out of CERCG or will it b Business as usual ?

They should have next couple of years of Revenue and Cash flow projections for their existing assets in production in the Otway, Bass & Perth Basin alongwith future c/flw from Stage-2 Waitsia at different gas/oil price scenarios (i.e. sensitivity analysis). That should be the backdrop to the true worth of their bizness.