Hancock, Strike head towards end game on Warrego

The three-way battle that has involved some of Western Australia’s highest-profile billionaires for junior gas producer Warrego Energy is heading towards a crunch point with the scheduled expiry on Tuesday of the $440 million conditional cash offer from Gina Rinehart’s Hancock Energy in the face of a higher, all-scrip bid from Strike Energy.

Chris Ellison’s Mineral Resources, meanwhile, holds 19 per cent, but says it has no intention of making a takeover bid for Warrego, describing the gas asset prices in the Perth Basin as “now overinflated”. That has He said the 8.8 per cent drop in Warrego shares on Friday, which was extended a further 2.7 per cent decline on Monday, underlined the volatility in the scrip behind the Perth Basin players, in contrast to Hancock’s firm bid.

Still, Strike has pointed to the price investors have been prepared to pay for Warrego’s shares on the market, calculating it represents a peak price on a resource basis of $2.14 a gigajoule, equating to a multibillion-dollar, look-through value for Strike’s own gas in the ground.

“They have inserted themselves in the Warrego situation to have a seat at the table and to potentially secure gas from the West Erregulla project via their shareholding in Warrego. “Gas in WA is becoming a more of a scarce commodity but is still artificially lower in price than gas across the rest of Australia and even around the world.”

Source: Energy Industry News (energyindustrynews.net)

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