In AWE

China Energy Reserve and Chemical Group (“CERCG”) has returned with a second bid for AWE at A$0.73/share, valuing the company at A$463 million. This follows the withdrawal of the earlier offer at A$0.71/share on 4^th December.

On 30^th November, CERCG put out a takeover offer for AWE at A$0.71/share contingent on due diligence, approval by the regulatory authorities and the CERBG board. The offer was at a 30% premium to the share price was deemed insufficient by AWE to grant access for due diligence. The bid was subsequently withdrawn on 4^th December.

CERCG remains fiercely private with limited information in the public domain. It is reported to have deep pockets with material property investments in Hong Kong to the tune of billions. It is also understood that some of the directors are also on the board of China New Energy Mining Limited, which is the JV partner to Sino Gas on upstream gas developments in China.

On 8^th December, CERCG re-launched an offer at A$0.73/share – marginally better but places limited value on the vast contingent resource base of the company with potential upgrade at Waitsia. The approach from CERCG is the third bid in four years. The Lone Star bid at A$0.80/share (A$421 million) in 2016 and Senex scrip/cash bid in 2013 (at A$672 million) were both rejected.

This bid demonstrates continued Chinese interest in pursuing overseas acquisitions, and follows GeoJade’s venture into the international E&P arena with the acquisition of Bankers Petroleum in 2016. However the Chinese state oil companies remain on the sidelines having been burned by poorly timed acquisitions in the past decade, and it is the smaller private Chinese E&Ps and investors that are coming to the foreground.