With AWE out of play, some hungry eyes size up Senex
BRIDGET CARTER, SCOTT MURDOCH
THE AUSTRALIAN
12:00AM FEBRUARY 13, 2018
After the dramatic three-way tussle in the oil and gas sector for AWE, some are now turning their attention to other targets.
A name that continues to be raised is Senex Energy, with a market value of $543 million.
Run by Ian Davies, Senex is seen as highly attractive as its shares remain relatively cheap compared to about four years ago when the oil price was higher.
Many believe it remains an ideal target for Santos.
The pair have adjoining assets in the Cooper Basin and the coal-seam gas assets in Queensland’s Surat Basin, so a potential tie-up makes sense.
Santos is rumoured to be looking at everything on offer and DataRoom can reveal it even considered weighing into the three-way battle for AWE that saw Japan’s Mitsui outbid Mineral Resources and China Energy Reserve and Chemicals Group.
Santos last year was rumoured to be running the ruler over Quadrant Energy, as reported here at the time.
But some say that with a semi-activist shareholder on its register in the form of ENN and Hony Capital, which controls about 15 per cent, it would not want to embark on any pricey deal that could drive its debt levels higher and rock the boat.
Any acquisition made would probably be paid for through the issue of new equity rather than debt, given its recent history which has involved emergency equity raisings and asset sales when it was caught out by the fall in the oil price.
Still, the group is heaving with investment bankers, with Deutsche, Rothschild and JB North & Co all providing advice in some shape or form, so no doubt they will be eagerly lobbying the company to embark on a transaction of some sort.
The driver is said to be a lack of assets in its stable that will significantly grow earnings over the next two to five years.
Part of the Quadrant Energy business is also thought to have been pitched to Harbour Energy after it walked away from Santos late last year.
But Harbour is interested in being a global LNG player and the West Australian Quadrant Energy business, which was tipped to have shelved its IPO earlier this year as first tipped by this column, is predominantly domestic gas.
Santos itself has been a takeover target of Harbour Energy and another more far-fetched possibility is that the US private equity-backed suitor takes out Senex and Santos in one fell swoop, given the Santos share price has come off the boil to $4.82 since it last took a look.
The theory around the market is that it has the funds to make a play for Santos at about $5.30 a share.
Senex has the private equity firm EIG Partners as its major backer, amassing a stake of more than 12 per cent almost a year ago, and so does Harbour Energy, so it could make sense that the listed operation is swallowed by the global investor.
Another possible buyer of Senex would be Beach Energy once its mammoth Lattice Energy acquisition has been digested.
Mitsui also acquired assets from Santos in Victoria about two years ago and should not be discounted as an acquirer of Senex, or even a partial buyer of Quadrant as its key shareholder Brookfield searches for an exit.
Quadrant comprises assets mainly in the Exmouth and Carnarvon basins off the north coast of Western Australia and is the largest single contributor to the WA domestic gas market.
Its assets include the Bedout Basin, which may not be ascribed any equity value should the entity list as a public company.
SXY Price at posting:
43.5¢ Sentiment: Buy Disclosure: Held
