The revised $10.4 billion bid by Harbour Energy for Australian liquefied natural gas (LNG) producer Santos looks at first glance like a winning hand, but it's still probably got the odds stacked against it.
The US private equity firm's fourth bite at the Santos cherry since August last year values the Adelaide-based company at a 28 per cent premium to the close on April 2, and is 43 per cent higher than the first attempt.
Recognising that this is a serious bid, Santos' board has decided to "engage further with Harbour", the company said in a statement to shareholders.
This is sensible, but shareholders should consider whether they want to sell out just as Santos is finally starting to reap the benefits of its investments, and the prospects for further improvement are getting brighter.
The Harbour offer values Santos at A$6.50 a share, a level the company last traded at in July 2015, at a time when the price of LNG and crude oil was falling, putting the company under pressure just as its massive Gladstone LNG plant in Australia's Queensland state was starting up.
When Santos was last at A$6.50 a share, Brent crude oil was around $58 a barrel and the spot price of Asian LNG was about $7.80 per million British thermal units (mmBtu).
These prices matter for the bid as the bulk of Santos' revenue is either in oil-linked longer-term LNG contracts, spot LNG prices, or in crude for the company's small oil output.
Brent crude ended last week at $67.74 a barrel and spot LNG was about $7 per mmBtu, although it's worth bearing in mind that LNG prices typically are weakest during the shoulder seasons between the winter and summer peak demand periods.
Spot LNG prices surged to $11.50 per mmBtu in early January, the highest in more than three years, as China bought additional cargoes to meet winter demand.
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Read more:
BP urges greater investment by energy producers to meet future demand
The gas that came in from the cold
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While future spot LNG prices are uncertain, the chances are that China will continue to boost its imports as part of efforts to reduce the use of polluting coal for winter heating.
On crude oil, the success of Opec and its allies in draining global inventories and boosting prices has led to a market consensus that prices are more likely to rise than fall over the medium term.
This means Santos is likely to receive higher revenues for its LNG from the Gladstone plant and its share in LNG operations in Darwin and Papua New Guinea, as well as for its domestic natural gas and oil output in Australia.
It's these revenue streams that Harbour Energy is eyeing, and it must be taking the view that Santos' share price has yet to reflect the brighter medium and longer term outlook.
For this reason the revised offer may not quite be enough, especially if Santos' existing major shareholders and the analysts they rely on start to re-rate the stock in line with expectations for higher crude and LNG prices.
The Santos share price did kick higher on the new Harbour Energy bid, jumping more than 5 per cent after the revised offer, but at its close of A$5.88 on April 6, it's still some way below the indicative value of the offer.
Rather than reflect that Harbour Energy is overpaying, this more likely shows that investors don't believe the bid will clear the regulatory hurdles in its way.
The deal will be subject to Australia's Foreign Investment Review Board, which may have concerns about a key domestic oil and gas producer falling into foreign hands.
Even if the board does greenlight the deal, the chances are that the Liberal Party-led federal government of Prime Minister Malcolm Turnbull will decline final approval.
Domestic energy policy is a hot issue in Australia, with consumers and industry angry and disillusioned at sharply rising prices for electricity and natural gas.
Any suggestion that a private equity company buying Santos would somehow be bad for consumers and industry would put tremendous pressure on a government that is trailing the opposition Labor Party in opinion polls.
And it wouldn't be hard to make such an argument as it's likely that Harbour Energy is focused on the LNG jewels in the Santos crown and not that interested in developing domestic natural gas supply.
Also, a debt-laden deal carries the risk of huge cost-cutting, with related job losses, another issue that would be exceedingly touchy in Adelaide, a city still reeling from the loss of Australia's car assembly plants.
These factors make it unlikely that Harbour Energy's offer will get over the line, at least in its current form.
It's possible that it could win political approval, if Harbour Energy agrees to whatever conditions are placed on the deal, but it's also possible that Santos' shareholders may want the offer sweetened a little more.
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
NEW%20UTILITY%20POLICY%3A%20WHAT%20DOES%20IT%20REGULATE%3F
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
Day 5, Abu Dhabi Test: At a glance
Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.
Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.
The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY%20PROFILE%20
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Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Mubalada World Tennis Championship 2018 schedule
Thursday December 27
Men's quarter-finals
Kevin Anderson v Hyeon Chung 4pm
Dominic Thiem v Karen Khachanov 6pm
Women's exhibition
Serena Williams v Venus Williams 8pm
Friday December 28
5th place play-off 3pm
Men's semi-finals
Rafael Nadal v Anderson/Chung 5pm
Novak Djokovic v Thiem/Khachanov 7pm
Saturday December 29
3rd place play-off 5pm
Men's final 7pm
INDIA'S%20TOP%20INFLUENCERS
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BRAZIL SQUAD
Alisson (Liverpool), Daniel Fuzato (Roma), Ederson (Man City); Alex Sandro (Juventus), Danilo (Juventus), Eder Militao (Real Madrid), Emerson (Real Betis), Felipe (Atletico Madrid), Marquinhos (PSG), Renan Lodi (Atletico Madrid), Thiago Silva (PSG); Arthur (Barcelona), Casemiro (Real Madrid), Douglas Luiz (Aston Villa), Fabinho (Liverpool), Lucas Paqueta (AC Milan), Philippe Coutinho (Bayern Munich); David Neres (Ajax), Gabriel Jesus (Man City), Richarlison (Everton), Roberto Firmino (Liverpool), Rodrygo (Real Madrid), Willian (Chelsea).
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Scores
Wales 74-24 Tonga
England 35-15 Japan
Italy 7-26 Australia
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
Company%20Profile
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Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
Company profile
Name: Dukkantek
Started: January 2021
Founders: Sanad Yaghi, Ali Al Sayegh and Shadi Joulani
Based: UAE
Number of employees: 140
Sector: B2B Vertical SaaS(software as a service)
Investment: $5.2 million
Funding stage: Seed round
Investors: Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office
Results
5pm: Maiden (PA) Dh80,000 (Turf) 1,200m, Winner: ES Rubban, Antonio Fresu (jockey), Ibrahim Aseel (trainer)
5.30pm: Handicap (PA) Dh85,000 (T) 1,200m, Winner: Al Mobher, Sczcepan Mazur, Ibrahim Al Hadhrami
6pm: Handicap (PA) Dh80,000 (T) 2,200m, Winner: Jabalini, Tadhg O’Shea, Ibrahim Al Hadhrami
6.30pm: Wathba Stallions Cup (PA) Dh70,000 (T) 2,200m, Winner: AF Abahe, Tadgh O’Shea, Ernst Oertel
7pm: Handicap (PA) Dh85,000 (T) 1,600m, Winner: AF Makerah, Tadhg O’Shea, Ernst Oertel
7.30pm: Maiden (TB) Dh80,000 (T) 1,600m, Winner: Law Of Peace, Tadhg O’Shea, Satish Seemar
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
Company%20Profile
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