Cue Energy, an independent oil and gas company based in Australia has recommended its shareholders to reject a takeover offer by New Zealand Oil & Gas, made earlier this month.
On February 12 2015, New Zealand Oil & Gas Limited (NZ Oil & Gas) announced an unsolicited, on-market takeover offer by its wholly-owned subsidiary, NZOG Offshore Limited (NZOG Offshore), to acquire all of the shares in Cue Energy that it does not already own.
As at close of ASX trading on 12 February 2015, NZOG Offshore had a relevant interest in 19.99% of Cue Energy Shares.
Cue Energy, headquartered in Melbourne, says that the offer Price of $0.10 per share is „only $0.01 per share higher than the closing price of Cue Energy Shares, on the day prior to announcement of the Offer.“
The Directors consider that the offer fails to appropriately value the established and diversified nature of Cue Energy’s production base
In a letter to shareholders Cue Energy said: „The Directors believe that the Offer Price of $0.10 per Cue Energy share is inadequate and substantially undervalues your Cue Energy Shares. Accordingly, the Directors unanimously recommend that you REJECT the Offer.“
The Directors consider that the offer fails to appropriately value the established and diversified nature of Cue Energy’s production base, the low level of future capital expenditure required to exploit the Company’s reserves, and the additional upside represented by the Company’s exploration prospects.
Cue Energy has a diversified production base through its interests in the Maari field in New Zealand and the Oyong and Wortel fields in Indonesia.
The company says it also has exposure to significant potential upside through its portfolio of near term exploration prospects across Indonesia, Australia and New Zealand and has a strong balance sheet, and no debt.
Cue has also advised that before accepting any offers, the shareholders should consider the opinion of the Independent Expert. The Independent Expert’s Report will be made available to Shareholders on or about March 2, 2015.
The bidder, NZOG has set a deadline for the acceptance of its offer. It is March 27, 2015.
As for NZOG’s intentions, Cue Energy had this to say:
“NZOG Offshore’s intentions are not entirely clear, and will depend upon the level of acceptances received to the Offer and the extent of Board control that might result. NZOG Offshore has indicated that it intends to conduct a strategic review of Cue Energy, and depending on the level of its shareholding at the end of the Offer Period, may proceed with compulsory acquisition and delisting of Cue Energy from ASX.“
According to Cue Energy, NZOG Offshore has stated that its primary interest in Cue Energy is in its production and development interests in the Maari and Manaia fields in New Zealand’s Taranaki Basin.
NZOG Offshore intends to undertake a review of Cue Energy with a view to identifying potential areas where Cue Energy’s business can be enhanced. NZOG Offshore anticipates that this review may identify some of Cue Energy’s assets that may be considered for divestment in the short to medium term.
“The Directors believe that its current strategy of maximising value from existing assets and maintaining a diversified and balanced portfolio of exploration, development and production opportunities remains in the best interests of Cue Energy Shareholders and is superior to the strategy reflected in NZOG Offshore’s intentions for the Company,“ Cue Energy said.