Origin Energy Remains Open for 'the Right Price'

Submitted by Craig Strzelecki on 2 June, 2008 - 11:06

Australia’s Origin Energy Ltd. is the biggest producer of gas from coal seams. It rejected BG group’s offer last week for A$13.6 million or $13 million but stated that it still remains open for conversation for any fresh offers at the right price. It is also open to any fresh offers from any other interested bidders.

BG Group is Britain’s largest supplier of liquefied natural gas from Atlantic Basin to Asia. It is also UK’s third largest natural gas producer. It had increased its bid to $15.50 per share which was put forward to the shareholders. However, it was hurriedly rejected at the eleventh hour when one of the Malaysian liquefied natural gas giant, Petronas, offered $2.6 billion for 40 percent of Queensland LPG project from Santos.

According to Managing Director of Origin Energy, Grant King, BG could not match the rival bid for Santos which was close to $16 billion and was substantially more than BG’s current offer. Yet another reason for rejecting BG’s bid was the report from an independent resource consultant from Netherlands, Sewell and Associates. They had reported a 121 percent expansion of its 3P reserves. He further confirmed that the company was always for sale but the price shall have to be “a lot more” than $15.50 per share. If people want to put an offer including BG, they are always free to do so.

BG Group had been expecting a positive reply from Origin Energy as it had already revised its bid by 48 percent from $14.70 a share to $15.50. That was a hike from $12.9 billion bid to $13.6 billion bid. According to BG, it is now evaluating all the available options for the deal. It may re-engage, initiate a hostile take over or simply walk away.

Origin Energy’s share prices rallied on the Australian Stock Exchange on May 30 following the rumours about Santos-Petronas deal. The stock prices rose 6.9 percent to A$16.15 and finally closed at $15.60 which was $1 more than its previous close. BG’s share fell 2.2 percent to 1266 pence on London Stock Exchange.