Shale Takeovers Looming as Texas Discounted in Australia
Buyers seeking a piece of North America’s shale boom can find it in Australia.
Australian companies exploring for oil and natural gas that’s trapped in shale rock in the U.S. and Canada are valued at a median of 11 times their reserves, a 23 percent discount to their counterparts that are listed on stock exchanges in North America, according to data compiled by Bloomberg. The valuation gap -- driven by Australian investors who are more than 8,000 miles (12,800 kilometers) from the companies’ wells in Texas and Oklahoma -- may lure acquirers, said RBS Morgans Ltd.
Antares Energy Ltd. (AZZ) is among potential targets, with its Southern Star field in the Permian Basin in Texas worth more than twice the company’s $130 million market capitalization on the Australian stock exchange, estimates Hartleys Ltd. Adelaide- based Sundance Energy Australia Ltd. (SEA), which last month agreed to sell a North Dakota asset for more than the company’s market value at the time, could lure bidders with its remaining acreage that’s worth at least five times more than what’s reflected in the share price, said Bell Potter Securities Ltd.
“I expect many more transactions involving Australian players and the huge number of U.S. and international players currently looking to open up and exploit shale gas and shale oil,” Ben Griffiths, who helps oversees $1 billion in assets for Sydney-based Eley Griffiths Group Pty., said in a telephone interview. “The area is a hive of activity and that’s not going to lessen.”
Melbourne-based Molopo Energy Ltd. (MPO) and Perth, Australia- based Red Fork Energy Ltd. (RFE), are also potential targets, he said....MORE