Australia's Origin Energy rejected a revised $13 billion bid from UK gas producer BG Group, saying its coal seam gas reserves alone were worth over $15 billion after doubling its resource estimate.
Origin, Australia's largest coal-seam gas producer, said it would now focus on how to get the best value from its reserves, possibly through partnerships to supply a liquefied natural gas (LNG) plant or even through a break-up of the company, which also has power generation and retail businesses.
"We're now back in the game and we will be aggressively pursuing those alternatives as quickly as we can," Chairman Kevin McCann told reporters.
Origin said it was open to talking to BG about supplying its planned LNG plant in Gladstone, Queensland, or any other offer.
"BG is welcome to come back in any way they want," Mr McCann said. BG said it was surprised by Origin's rejection and was considering its options.
Origin raised its estimated reserves by 121 per cent, in a move seen as raising the pressure on BG to come back with yet more money as it looks to expand and meet surging global gas demand.
Origin said its decision was also influenced by news today that Malaysian state-owned oil firm Petronas had agreed to pay $2.5 billion for a 40 per cent stake in an LNG plant planned by Australian energy firm Santos.
"It's not a surprise that Origin would turn it down. Santos' transaction yesterday has really set a new benchmark for the price of coal-seam gas," said Paul Johnston, a utilities analyst at Commsec Securities.
Santos said yesterday the Petronas deal valued its proved and probable (2P) reserves at A$4.91 per gigajoule (GJ), or A$1.65 per GJ if using the largest estimate of the coal-seam gas reserves.
Origin said BG increased its offer to A$15.50 per share in cash, valuing it at about A$13.6 billion and up from an initial offer last month of A$14.70 a share.