Tuesday, August 19, 2008

Playing the climate card ( BG Group; Origin Energy [BG.L; ORG:ASX])

From Business Spectator:
In what may be a world first for a large takeover battle, Origin Energy has played heavily on its climate friendly credentials as it seeks to rebuff the $13.8 billion cash bid from England’s BG Group.

The Macquarie-advised Origin released its formal takeover defence documents today, which suggest the $15.50 a share offer fails to recognise the potential value of Origin’s assets, in light of increased Asian demand and the potential for carbon trading to change the game.

With investments in wind, hydro, geothermal and solar Origin has described itself as the largest “green energy” retailer in Australia and states that it is “well placed to capture value from the introduction of the Federal Government's Carbon Pollution Reduction Scheme.”

It says its gas reserves are significantly undervalued by BG because global energy prices, particularly coal, are rising, which makes alternative fuels such as gas more competitive. LNG prices are also chasing oil prices higher and domestic prices can be expected to rise rapidly towards export parity. The carbon pollution reduction scheme would make gas an even more attractive fuel for electricity generation because it has lower carbon emissions than coal....MORE