SYDNEY - [AAP] AWE Limited (ASX: AWE) has agreed to a sweetened takeover offer from mining services firm Mineral Resources (ASX: MIN) that it hopes will fend off interest from a Chinese state-owned energy giant.

The company's board on Thursday unanimously recommend a revised cash and scrip offer from Mineral Resources valuing the oil and gas explorer at $526 million.

Under the new proposal, shareholders will receive $0.415 in cash and between 0.0198 and 0.0277 Mineral Resources shares, implying a value of 83 cents per AWE share.

AWE Chairman Kenneth Williams said. the acquisition price "represents a highly attractive opportunity for AWE shareholders to realise a material premium for their shares".

AWE has been the subject of a bidding war between Mineral Resources and China Energy Reserve and Chemical Group (CERCG), with the suitors targeting its 50 per cent stake in the Waitsia gas field in the Perth basin.

AWE, which this week raised the reserve estimate at Waitsia by 80 per cent to 820 petajoules, 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.

The Chinese bidder initially offered 71 cents a share for AWE but quickly raised this to 73 cents a share after being rebuffed by the target company.

However, this was topped by an initial all-cash 80 cents a share offer from Mineral Resources, followed by the latest cash and scrip proposal.

Mineral Resources, which offers crushing, processing and other services to the mining industry, plans to use AWE's gas reserves to lower its fuel costs in the long term and also hopes to supply gas to outside users.

It announced its entry into the gas sector in November through the acquisition of the assets of Empire Oil and Gas from administrators.

AWE also owns interests in the producing BassGas and Casino projects, off Victoria's coast, and a 50 per cent stake in the Santos-run Ande Ande Lumut oilfield in Indonesia.

By 1239 AEDT, AWE shares were down 2.8 per cent to 85.25 cents in a weak Australian market.

 

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