November 21, 2017 Read More →

Market Reveal May Put Santos Takeover Out of Reach for Harbour

Cetus News:

Institute for Energy Economics & Financial Analysis investment analyst Bruce Robertson said they are very different proposals, stating that Harbour’s offer “seems to be a bit more legitimate than the Specter bid”.

FNZC is also tipping FIRB troubles, pointing to the shortages for east coast customers that forced a government intervention earlier this year.

“Given the parlous state of the east coast gas market, one wonders what view would be taken of the operator of both the Cooper Basin and Gladstone LNG [GLNG] being acquired by a relatively unknown, foreign entity,” it said.

If Harbour Energy’s bid were accepted, it would still have to pass the FIRB, an issue exacerbated by the tightened east coast domestic gas supply.

“FIRB approval for the deal would be required,” Citi analysts stated, “which could be a risk given current domestic gas markets. We also note the Treasurer can block transactions from offshore entities.”

Mr Morrison’s office declined to comment on whether it would support a bid but South Australian Treasurer Tom Koutsantonis has already raised concerns.

Mr Robertson believes domestic gas supply issues have been overblown and any offer is likely to pass through the FIRB relatively easily.

“The FIRB has been surprisingly inactive in the case of takeovers lately, opposition to the bid will be an unlikely event,” Mr Robertson said.

He added that a takeover from a player outside the current market would ensure a monopoly is not created, thus avoiding competition regulator problems, and will not drastically change the field of play.

The major asset Harbour may aim for is Santos’ Papua New Guinean LNG projects, analysts said.

Mr Robertson said while GLNG in Queensland and other onshore gas assets appear to be challenged, “PNG is very attractive”.

“It’s a low-cost asset, and can compete in a low-cost gas world, it’s valuable.”

He added that the prospects for its Northern Territory offshore projects were prospective.

Analysts have also pointed to the growth opportunities of Santos’ Narrabri project, in NSW, although its future is dependent on the state lifting coal seam gas moratoriums.

Market reveal may put Santos takeover out of reach for Harbour

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