RE:RE:RE:Seek and findThere are certainly a lot of names and subsidaries thrown into the mix, which really complicates who owns what. However, I always thought this was interesting...
Long Run chairman and chief executive Bill Andrew said Monday the buyers want their identity withheld for now but it will be released at a later date. He said they have current large oil and gas investments in Canada and, though they refer to themselves as a group, they operate as a corporation.
Also, I'm not sure myself if Sino Gas & Energy is related to the Sinoenergy Pacific that is the suspected buyer of LRE. However, just from researching it was actually comforting to get a better understanding of the immense demand from China for natural gas, especially as they're trying to move away from coal.
Demand for natural gas use in China is being driven by rapid urbanisation, industrialisation and a focus on green initiatives to reduce China over dependence on high carbon-emitting coal. Coal still accounts for nearly 70% of China primary energy mix, despite progress in recent years, while political pressure is mounting to improve the country’s poor air quality. China’s 12th Five-year plan (endorsed by National People’s Congress on 14 March 2011, covering 2011-2015) strongly favours gas consumption and provides economic incentives, in the form of both pricing reform and infrastructure investment, to accelerate unconventional gas projects. Natural gas can be readily substituted for inefficient coal in power generation and given it currently represents just 5% of total Chinese energy demand, compared with 24% globally (2013), there is significant scope for using more natural gas in the country’s expanding industrial, residential, transportation and power sectors.
The Chinese government targets increasing the share of natural gas as a portion of total energy consumption from 4% in 2011 to 8% by the end of 2015 and over 10% by 2020 to alleviate pollution caused by their heavy reliance on coal and substitute consumption of more costly oil.
So to me, this implies how valuable this deal could be for a company with Chinese roots. While there's no doubt it could get ugly over the next few days / weeks, it still decreases the likelihood of the buyer backing out quite as easily as we may be led to believe. All speculation of course.
That said, I'm actually hoping for another buyer to come into the mix, although that's often unlikely in these cases. The company, with shop setup, is effectively being sold for just 100 mill.