Antares sale postponed

Antares Energy announced that the completion of an asset sale to an unknown buyer has been delayed at the buyer's request. This is bad news. Oil prices have fallen yet again since the deal was announced so the delay imperils the sale. Without an asset sale, Antares is in trouble.

Its sole source of revenue comes from its stake in Breitburn Energy Partners, which was paying generous dividends that have now stopped as Breitburn struggles for survival.

One positive is that lower oil prices have forced asset owners to consolidate so there is a highly liquid market for shale assets. The Permian Basin, where Antares operates, is the only shale basin to report higher output in the face of lower prices and hence is highly sought after. In our view, a sale is still likely albeit delayed into the new year, possibly at a lower price.

With shares suspended from trading, there is little investors can do but hope the sale is completed. If it is, under current terms Antares will hold net cash of about 80cps – 60% above the current share price. If the sale falls over, the business might do likewise. One way or another, a conclusion draws near. HOLD.

Disclosure: The author owns shares in Antares Energy.