Salient to Investors:
Bloomberg calculates that Australian stocks of explorers of shale rock in the U.S. and Canada sell for a median of 11 times reserves versus 14.3 times for equivalent North American companies. RBS Morgans say this valuation gap may lure acquirers.
Ben Griffiths at Eley Griffiths Group expects many more transactions involving Australian players and the huge number of U.S. and international players currently looking to open up and exploit shale carbons.
Krista Walter at RBS Morgans said oil shale assets sales are common but company takeovers can happen as well. Walter said some lower valuations are because the companies have higher levels of debt than Australian investors like – less of a problem for U.S. investors.
Johan Hedstrom at Bell Potter Securities said Australian companies aren’t fetching the valuations they deserve, and we are much better informed and educated about shale than 12 months ago.