SYDNEY - [AAP] The Chinese state-owned energy giant bidding for AWE Limited (ASX: AWE) remains in the hunt after receiving Foreign Investment Review Board (FIRB) approval for its attempt to acquire the oil and gas producer.

China Energy Reserve and Chemical Group (CERCG) will, however, need to make a significantly higher proposal if it hopes to compete with a rival bid from mining services firm Mineral Resources (ASX: MIN), analysts say.

AWE on Thursday agreed to a sweetened 83 cents a share cash and scrip offer from Mineral Resources, which trumped the 73 cents a share bid by CERCG.

Any competing bid by CERCG would need to be superior in factors including consideration, conditionality, funding, certainty, and timing, RBC Capital Markets analyst Ben Wilson said.

"We don't believe that simply raising CERCG's current all-cash takeover bid to the same 83 cents a share level would be sufficient to make it a superior offer," he said.

"CERCG would need to make a materially superior proposal, as otherwise Mineral Resources could simply raise its current offer to match CERCG's bid."

The two suitors are targeting AWE's 50 per cent stake in the Waitsia gas field in the Perth basin, for which the company this week raised the reserve estimate by 80 per cent to 820 petajoules.

AWE has touted it as the largest onshore gas discovery in Australia in 40 years, capable of supplying around 10 per cent of Western Australia's domestic market needs.

By 1355 AEDT, AWE shares were up 1.5 per cent to 86.75 cents, above the Mineral Resources offer price, indicating market expectation for an improved offer.

 

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