"Medco needs to prove it's serious": Commentary

Medco is not the only one that finds Novus Petroleum's assets attractive, Australian daily Sydney Morning Herald comments on Tuesday.

Medco Energi, Indonesia's largest publicly-traded oil and gas house, has until the end of the month to lift its bid for Novus Petroleum, but even that may not be enough.

Since Bob Williams and his friends at Sunov announced earlier this month that Santos would effectively underwrite their $1.77-a-share bid by paying up to $US202 million ($274 million) for Novus's Cooper Basin and Indonesian assets, it is understood other parties have approached them.

While not in the Sunov consortium, these oil and gas groups are said to be interested in Novus's US and Middle Eastern fields and would provide Williams with more flexibility should Medco raise its $1.74-a-share offer.

Sunov could tap these groups for more cash if it can justify a higher valuation for the northern hemisphere assets.

Or Sunov could renegotiate its deal with Santos, assuming the Adelaide group is prepared to pay more for the local fields.

However, given the recent rumours about Santos's ability to claim its full insurance cover for the New Year's Day fire at its Moomba plant, chief executive John Ellice-Flint may be reluctant to put more money on the table.

All the while, time is running out for Medco. Its last chance to sweeten its offer falls one week before the April 6 closing date.

Medco is discussing an increased offer with its shareholders, led by Thailand's PTT Exploration & Production, but is also said to be weighing up other potential deals in Indonesia.

Whatever the result, a new offer is not expected to match independent expert Grant Samuel's valuation range for Novus of $1.96 to $2.75 a share.(*)