The Australian oil and gas player, Central Petroleum Limited (ASX: CTP) recently announced that the company has received a takeover offer from Macquarie Group Ltd. As per the offer, the company has been valued at about 76 million. CTP was in a trading halt session state from late last week, as CTP was set to announce about details regarding an unsolicited, non-binding and indicative proposal to acquire 100% of its issued capital at 17.5 cents per share. The stock surged 37% on November 14, 2016 post the release of the news.
 
The company has highlighted that the proposal does not look to be in the best interest of the shareholders and is also subject to due diligence and entry by the parties into definitive transaction documents. However, CTP is ready to grant Macquarie an access for due diligence subject to appropriate documentation. This, in a way, might lead to a reconsideration of proposal by Macquarie. As of now, Macquarie is a shareholder of the company (with 2.3% of shares) as well as its principal financier.
 
On other hand, CTP in its September quarter updates reported that the cash balance at the end of the quarter was $7.2 million. The company made a final payment of $3.3 million to Santos due to the underspend on the “Free-carry” component of the Mereenie acquisition. The company otherwise witnessed 5% rise in crude oil prices for oil production during the quarter.
 
Given the above, it appears that the company is expecting to receive a better proposal given the fact that long-term domestic gas supplies are estimated to be witnessed from 2018. At the same time, it is important to note that any sector-driven bad news or slip in stock prices may derail Macquarie’s approach.
 

Revenue Timeline (Source: Company Reports)

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