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#Takeover offer
Added a month ago

Yes, didn't take nostradamus to see that coming :)

The offer is close to my mid case valuation of NWE about $400m, which is based on producing about 1,000PJs (gross) from Lockyer Deep and surrounds. A lot needs to go right, but MIN are indicating they expect it to based on this bid, and then a bit more. There's certainly upside for the taking at this price.

Not sure how this plays out, MIN hold all the aces with their 20% holding and 80% in the permit. Hancock hold a few, maybe they'll try make them earn it but I doubt it. I fear the big guys might step aside for each other to get the minnows for a reasonable price. I guess I hope the NWE board put up a good defence and somehow attract a higher offer.

The fact that MIN have bid prior to the drills says enough for me, they like the risk reward. I plan to hold my shares through the drill program pending better offers or anything compulsory.

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#Takeover offer
Added a month ago

Looks as if @Longpar5's hunch from 2 weeks ago was correct. MinRes have gone in for a takeobver. 1 (ASX: MIN) share for 1,367 (ASX: NWE) shares. This implies a takeover share price of $0.06 a share.


https://cdn-api.markitdigital.com/apiman-gateway/CommSec/commsec-node-api/1.0/event/document/1410-02613532-449GEOAU8V0DPK944JSFNTB3SJ/pdf?access_token=0007TxPU1EZ2WLwGoA6HO5lBDuvY

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#Bear Case
Added 2 months ago

NWE carry a fairly hefty $300 valuation given they have no reserves/resources and are basically a one trick pony. If both the new Lockyer Deep wells fail they will surely drop in value and won't have any cash left. Given the raging success of Lockyer Deep 1 its unlikely, but they are going a fair way down and along structure in these wells and failure can't be ruled out.

A lower share price may see MIN either buy them out cheaper, or leave it in the ground for longer until they can squeeze NWE out over years. I'm not sure they'd deliberately do this as their own priorities would take precedent, but again I don't know.

Again, I am generally bullish and own shares IRL, but it can't be ruled out.

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#Bull Case
Added 2 months ago

I think NWE are a takeover target for MIN. Why.......

Norwest own 20% of the Lockyer Deep discovery and surrounding acreage, operated by Energy Resources, a subsidary of Mineral Resources (MIN). Lockyer Deep 1 had amazing deliverability for an onshore Aus well, something like 120mmscf/d, they quoted AOF of 190mmscf/d (which is a theoretical maximum if there was no losses due to having to flow up a 5km deep well). This is incredible and very unlikely to be linked to only a small resource pool, based on what we've seen at Waitsia and the Erregulla fields this should be even better.

MIN have not booked any reserves or resources at Lockyer Deep, they're not under any pressure to as a well capitalised, well run company they are happy to be low key. They are going to drill 2 x appraisal/exploration wells in the coming months. Potential for the resource to be between 0.4 - 3 Tcf based on some of their preliminary mapping. As I said above, given the high rates I expect a big column of gas. If these 2 wells come in, which I think is greater than 50% chance, then I think MIN will buy out NWE - if they don't do it beforehand. They already own 19.9% and won't want NWE holding up or complicating any development plans. It also looks to me like someone is capping the price below 5cps.


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