Article by Peter Milne courtesy of The Sydney Morning Herald.
Beach Energy has increased its bid for Perth basin gas play Warrego Energy by 25 per cent to fend off an off-market offer from Gina Rinehart’s Hancock Energy in an escalating battle for a slice of a promising gas field north of Perth.
The bidding war kicked off three weeks ago when Warrego’s equal partner in the West Erregulla field Strike Energy revealed an all-scrip offer with an implied price of about 19 cents a share.
Beach Energy, which owns half the nearby Waitsia field, responded the next day with a 20-cents-a- share cash offer that valued Warrego at $246 million.
Warrego’s board quickly accepted the deal from the Adelaide-based company, 30 per cent owned by WA billionaire Kerry Stokes, unless a superior proposal appeared. That happened on Wednesday when Hancock Energy which has no current interests in the Perth Basin offered 23 cents a share.
Beach Energy responded on Friday morning by increasing its offer to 25 cents a share.
At stake is a promising gas field that can quickly be brought into production without controversial hydraulic fracturing to supply a market that many expect to tighten in coming years after decades of relatively low prices due to enforced supply from WA’s huge gas export projects.
An added bonus would be the opportunity to export gas through Woodside’s underutilised North West Shelf LNG plant, but that would require an exemption from the McGowan Government’s ban on the export of onshore gas.
The only exemption to date was given to Mitsui and Beach Energy’s Waitsia field in 2020. The decision was controversial as Kerry Stokes, the owner of WA’s only newspapers and dominant TV channel, was an indirect beneficiary through his interest in Beach Energy
Credit Suisse energy analyst Saul Kavonic said acquisitions in the Perth Basin were just starting.
“There may still be more would be consolidators who may reveal their hands,” he said.
Mineral Resources chief executive Chris Ellison, whose company has acreage in the Perth Basin, last week said he has his eyes on corporate moves in the area.
“I’d be lying if I said I wasn’t interested,” he said.
Warrego shares closed on Thursday at 26 cents each, valuing the company at $312 million. In the month before Strike Energy’s initial bid Warrego shares had an average price of about 14 cents.
