I don’t think the three buyers of AWE are blind. There have to...

I don’t think the three buyers of AWE are blind. There have to be a clear reason why they prefer to buy AWE over SXY. My view is the gas in SXY are more difficult to extract. Takeover valuation of AWE is $7.80/boe. Here are excerpts from the Independent Expert’s Report of AWE:


In September 2017, Beach Energy announced the acquisition of Lattice Energy for A$1,585 million on a cash free debt free basis54. Lattice Energy had 2P reserves of 157 MMboe which implied a 2P reserve multiple of circa 10.1x A$/boe. Beach Energy’s acquisition of Lattice Energy is considered comparable given there are a number of assets in common with AWE such as Lattice’s 50% interest in WGP, 67% interest in Beharra Springs and 42.5% interest in BGP. However, different to AWE, Lattice Energy produced circa 17.3 MMboe in FY17 versus 2.36 MMboe for AWE from continuing operations. In addition, circa 51% of Lattice Energy’s 2P55 reserves are in relation to producing assets vs only 20% for AWE. Our mid-point valuation of AWE implies a 2P reserve multiple of 7.8 A$/boe which is at a discount of circa 22.8% to the multiple implied by the Lattice Energy acquisition. We are of the opinion that this multiple differential is not unreasonable given the higher risk profile of AWE’s portfolio and the significantly higher level of developed 2P reserves owned by Lattice Energy.