Against the backdrop of surging domestic gas prices, independent explorer and producer AWE has attracted takeover interest, prompting it to go into a trading halt on Friday.
AWE reported it had received a "non-binding and conditional" merger proposal.
With a number of attractive assets - from the Bass Strait and Otway Basin off Victoria, to acreage in the Perth Basin, along with Indonesia and the US - a range of local or overseas investors could be interested in acquiring the company.
A particular attraction is that half of its proven and probable gas reserves have not been contracted for sale, giving it prime exposure to the unfolding rise in domestic gas prices.
AWE already works with Origin Energy in the BassGas venture and Santos recently bought into acreage AWE holds in Indonesia, paying $US188 million for a half interest in Northwest Natuna, which generated a profit of $60 million.
The cash raised from the sale will allow AWE to fund its planned capital expenditure and exploration programs from operating cash flow.
AWE's spread of assets, coupled with a fully funded growth profile has prompted ongoing broker support for its shares, with seven of the 10 analysts who follow the stock holding positive recommendations on the shares.
Most also value the shares significantly above the last traded price of $1.185, which puts a price of $620 million on the company, with analysts valuing its shares at around $2 each.
US investment bank Citi has a $2.37 a share price target for AWE shares, which makes its shares "the best-value small cap exploration and production in our sector in our view".
A key attraction is that AWE is seeking to double production by 2017, with its growth ambitions fully funded.
"While there is some execution risk, we think the stock is heavily discounted for these risks," it told clients.
AWE has a wide-open share register with its top four shareholders institutional investors, led by IOOF with 7 per per cent, Dimensional Funds holding 6 per cent, AMP 5.6 per cent and Westpac 5 per cent.