Australian Explorer Senex Energy Said to Propose Merger With AWE

Senex Energy Ltd. (SXY), an Australian oil producer, made a preliminary offer to merge with AWE Ltd. (AWE), an explorer with shale fields in Australia and an oil project in Indonesia, according to two people with knowledge of the matter.

The proposal is at an early stage and the companies have yet to agree on a potential transaction, the people said, asking not to be identified as the matter is private. AWE shares were halted from trading Dec. 13 after the company said it received a non-binding merger proposal from a party it didn’t identify.

AWE, based in Sydney, has shale gas assets in the Perth Basin of Western Australia and an Indonesian project that has about 101 million barrels of recoverable oil. Brisbane-based Senex is focused on oil and gas in central Australia’s Cooper Basin and coal-bed methane on the country’s east coast.

The Senex proposal was reported earlier on Dec. 13 in the Australian Financial Review’s Street Talk column. Senex is seeking a deal to combine with AWE, the newspaper said, citing sources it didn’t name.

Matthew Sullivan, AWE’s Sydney-based investor relations manager, declined to comment yesterday. Andrew Barber, Senex’s Brisbane-based spokesman, also declined to comment.

Shares of AWE have fallen 2.5 percent this year, giving it a market value of A$619 million ($555 million). The benchmark S&P/ASX 200 Index has risen 9.7 percent over the period. AWE has dropped 56 percent over the past four years.

Senex has gained 11 percent in Sydney this year, valuing the company at A$881 million.

The main attractions of AWE are its Western Australian gas fields and its oil development in Indonesia, Nik Burns, a Melbourne-based analyst at UBS AG, said Dec. 13 by phone. AWE is also set to benefit from rising gas prices on the east coast of Australia, where the company is a partner with Origin Energy Ltd. (ORG) on the BassGas project, he said.

AWE last month completed the sale of a 50 percent stake in its Indonesian oil project, including the Ande Ande Lumut development, to Santos Ltd. for $188 million. In May, it boosted its estimate for the Indonesia project’s recoverable oil by 33 percent to 101 million barrels.

To contact the reporters on this story: James Paton in Sydney at jpaton4@bloomberg.net; Brett Foley in Melbourne at bfoley8@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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