Australia's AWE rejects buyout offer from Lone Star
Australia-based oil and gas producer AWE has rejected an unsolicited buyout offer from Lone Star that values the company at approximately A$421 million ($310 million).
AWE said in a filing that the offer - submitted by Lone Star Japan Acquisitions on behalf of a Lone Star fund - of A$0.80 per share was not a fair reflection of the underlying asset value of the company. The offer represents a 28% premium to the May 10 closing price. As of early afternoon trading on May 11, AWE stock was up nearly 16% at A$0.71.
The company owns exploration, development and production assets in Australia, New Zealand, Indonesia, China and the US. Its proven plus probable reserves, when fully developed, are expected to translate into annual production of more than 10 million barrels of oil equivalent (BOE).
However, AWE has struggled as a result of falling oil and gas prices. The company's stock is down 50% on a 12-month basis, falling as low as A$0.31 in January before staging a rally as crude prices stabilized.
Lone Star's move comes days after David Biggs, formerly gas marketing head at BHP Billiton, took over as CEO of AWE. He said on joining that oil prices are likely to remain volatile for the rest of 2016 and so the initial focus would be on domestic gas projects and an ongoing cost-cutting initiative.
AWE posted sales revenue of A$283.7 million for the year ended June 2015, down 14% year-on-year, while field EBITDAX - sales revenue less production costs and royalties - fell 31% to A$143.2 million. The company also slipped from a net profit of A$62.5 million to a loss of A$230.2 million, largely due to substantial cash impairments tied to lower oil prices and reserve reductions.
In the three months ended March 2016, revenue came to A$41 million, down from A$63 million in the previous quarter, while field EBITDAX fell to A$20 million from A$31 million. AWE's finances were still robust with a net cash position of A$52 million, no debt and A$400 million in undrawn facilities.
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