Article by Sean Smith courtesy of the West Australian.
Norwest offer a ‘Christmas present’ Chris Ellison’s Minerals Resources is open to cooperating on gas with Gina Rinehart after joining the gathering consolidation of the onshore Perth Basin with a $403 million buyout bid for partner Norwest Energy.
The $16 billion mining and services group has bypassed Norwest’s board and gone straight to its shareholders, seeking to secure full ownership of the Lockyer Deep gas find, touted as potentially Australia’s biggest onshore discovery.
The offer of one MinRes share for every 1367 shares in Norwest targets the 80.1 per cent of the junior it does not already own, implying a value of 6¢ a share.
While investors typically prefer cash over scrip, Mr Ellison on Friday built a strong case for its bid by highlighting the value captured by the shareholders in other companies taken over by MinRes with stock-based offers.
“It’s Christmas time, so we’re giving the Norwest Energy guys the ultimate present, MinRes shares wrapped in a bow,” Mr Ellison, MinRes’ founder and chief executive, said.
Norwest advised shareholders to take no action while the company’s board evaluates the offer.
However, it seems likely Norwest directors will hold out for more, mindful of the growing value of WA gas amid a national global energy squeeze and ahead of a tightening in the State’s domestic gas supplies. Mineral Resources is chasing its own low-cost gas to power its mining operations and a push into downstream processing, seeing the fossil fuel as a key transition fuel as it reduces its reliance on diesel and moves into renewable energy.
Having built a portfolio of gas exploration tenements since 2015, the group recorded a major find last year when its 80-20 joint venture with Norwest struck gas 4.5km below the surface with the Lockyer Deep well. The discovery, 380km north of Perth, could be linked to the Dampier-to-Bunbury pipeline, just 15km away.
MinRes has described the find as potentially the biggest in onshore Australia and is gearing up to spend as much as $200 million on follow-up drilling and development that could see the project producing 250 terajoules a day within two years.
The Perth Basin has leapt into investor focus over the past two months on the back of the threeway takeover for Warrego Energy between Mrs Rinehart’s Hancock Prospecting, Beach Energy and Strike Energy.
Hancock — which is also on the Norwest share register with a 3 per cent stake — currently has the upper hand for Warrego, Strike’s partner in the proposed West Erregulla gas development neighbouring Lockyer Deep, after gazumping Beach’s increased offer two weeks ago with a higher $342m cash bid.
Mr Ellison said on Friday MinRes was “doing a lot together” with Hancock in mining “and no doubt there would be an opportunity” to cooperate on gas. “I mean we can work with them, but I haven’t had a discussion with them on the Perth Basin,” he said.
Mr Ellison suggested MinRes was motivated to take out Norwest to avoid it falling to another player seeking a position in the Perth Basin consolidation.
“The real value is getting rid of the nuisance value,” he said.
“We like to be in control of what we are doing in this type of environment. We basically want to do our own thing.”
