Global Cross-Asset Energy Analyst, VAC Investments

Aaditya Chintalapati, CFA

Global Cross-Asset Energy Analyst

VAC Investments

Equity Bottom-Up

Sino Gas & Energy Holdings / Equity Bottom-Up

<p>We believe market concern around <a href="https://www.smartkarma.com/entities/6347" target="_blank" data-smartkarma-citation="entities:6347:1">Sino Gas &amp; Energy Holdings Limited (SEH AU)</a> 's recent c.30% (adjusted) 2P reserves downgrade is overdone. SEH management's subsequent reiteration that planned development work, as well as the Lone Star offer, remains unaffected by the lower reserves is encouraging and should mitigate any near-term share price headwinds. Crucially, with the deal's adjusted implied EV/2P multiples (c.6x versus c.4x previously) now more aligned with street expectations, we would argue there is a higher likelihood that the offer is accepted by shareholders as well.  </p>

We believe market concern around Sino Gas &amp; Energy Holdings Limited (SEH AU) 's recent c.30% (adjusted) 2P reserves downgrade is overdone. SEH management's subsequent reiteration that planned development work, as well as the Lone Star offer, remains unaffected by the lower reserves is encouraging and should mitigate any near-term share price headwinds. Crucially, with the deal's adjusted implied EV/2P multiples (c.6x versus c.4x previously) now more aligned with street expectations, we would argue there is a higher likelihood that the offer is accepted by shareholders as well.  

Sino Gas & Energy Holdings (SEH AU) - 30% Reserves Downgrade Boosts Deal Likelihood

<p><a href="https://www.smartkarma.com/entities/6347" target="_blank" data-smartkarma-citation="entities:6347:1">Sino Gas &amp; Energy Holdings Limited (SEH AU)</a> management has recommended the acceptance of an all-cash offer by Lone Star of AUD 0.25/share for SEH's outstanding share capital. This implies a market value of AUD 530m, a c.20% premium to share prices a day prior. Our colleague <a href="https://www.smartkarma.com/profiles/263" target="_blank" data-smartkarma-citation="accounts:263">Pranav Rao</a> 's recent insight <a href="https://www.smartkarma.com/insights/sino-gas-energy-holdings-unconventional-gas-comes-to-the-fore" target="_blank" data-smartkarma-citation="insights:20903">Sino Gas &amp; Energy Holdings: Unconventional Gas Comes to the Fore </a>provides a broad summary of Lone Star's offer, including timing and necessary deal milestones. In this short report, we evaluate the offer from a resource/production perspective and its associated read-across for the rest of the Chinese Coal Bed Methane sector.</p>

Sino Gas &amp; Energy Holdings Limited (SEH AU) management has recommended the acceptance of an all-cash offer by Lone Star of AUD 0.25/share for SEH's outstanding share capital. This implies a market value of AUD 530m, a c.20% premium to share prices a day prior. Our colleague Pranav Rao 's recent insight Sino Gas &amp; Energy Holdings: Unconventional Gas Comes to the Fore provides a broad summary of Lone Star's offer, including timing and necessary deal milestones. In this short report, we evaluate the offer from a resource/production perspective and its associated read-across for the rest of the Chinese Coal Bed Methane sector.

Sino Gas & Energy Holdings - Lone Star Offer a Test-Case for Chinese CBM Asset Tradability

China

Sino Oil And Gas Holdings Ltd. is an energy company with a key focus on oil, coalbed methane (CBM) and conventional natural gas. The Group currently operates oil and gas fields in Shaanxi and a CBM project in Sanjiao Block in Erdos Basin, Shanxi, China.

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Sino Oil And Gas Holdings (702 HK)

Sino Gas & Energy Holdings (SEH AU) - 30% Reserves Downgrade Boosts Deal Likelihood

We believe market concern around Sino Gas & Energy Holdings Limited (SEH AU) 's recent c.30% (adjusted) 2P reserves downgrade is overdone. SEH...

Aaditya Chintalapati, CFA

Sino Gas & Energy Holdings - Lone Star Offer a Test-Case for Chinese CBM Asset Tradability

Sino Gas & Energy Holdings Limited (SEH AU) management has recommended the acceptance of an all-cash offer by Lone Star of AUD 0.25/share for...

Aaditya Chintalapati, CFA

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