WestSide Corporation managing director Mike Hughes says the Queensland coal seam gas producer has received no further word from Chinese suitor Landbridge as to whether it will renew its approach, which was effectively voided by WestSide’s recent gas sales agreement with Santos’s GLNG venture. Mr Hughes said Landbridge had so far given no further indication of its intentions, after WestSide clinched the gas sales deal, and declared the conditional proposal from the Chinese bidder as “manifestly inadequate”.
“We’re getting on with the business,” Mr Hughes said in Sydney.
“If someone wants to get on and make a real offer at a real price, then clearly we’d consider it.”
Morgans analyst Krista Walter said the deal should be seen as a “vote of confidence” in WestSide and the Meridian field. She said it “reduces market uncertainty surrounding field productivity potential and the company’s ability to commercialise its reserves.” Morgans has an ‘Add’ recommendation on WestSide stock, with a share price target of 49¢.
The conditional proposal from Landbridge, a large private port operator in China, was for 36¢ per share, valuing the company at $160 million. It compares with the tentative 52¢ a share approach made by PetroChina for WestSide in November 2012, which was eventually withdrawn in May last year. Previously, LNG Ltd had also approached WestSide with a potential proposal, but no deal emerged.
Landbridge’s proposal was conditional on WestSide not entering into any new gas sale agreement that lasts for longer than six months. As a result, the board’s decision to ink the GLNG deal, breaks that condition.
Mr Hughes said on Tuesday it was uncertain whether Landbridge, which is being advised by PricewaterhouseCoopers, would therefore still have to make an offer or not under the original terms of its “conditional intention to make a conditional takeover offer.” WestSide is being advised by Highbury Partnership.
Mr Hughes said WestSide was current in talks with lenders about the potential for debt funding for the investment. However the amount of funding needed may fall if the venture partners decide to use leased compression equipment rather than building and owning it themselves, he said.
WestSide is fully funded for work planned at Meridian this year, which includes wells to be drilled starting in about May, Mr Hughes said.
WCL Price at posting:
29.0¢ Sentiment: None Disclosure: Held
