A fierce battle is underway in Perth, Australia, for control over a major gas field. Warrego Energy is at the centre of the takeover bids, and with this, the fight for onshore gas cements the future of WA gas into the next decade.
Warrego Energy is an exploration and production company with assets in the Cooper Basin, Surat Basin, and Perth Basin in Australia. Strike Energy, on the other hand, is an oil and gas exploration and production company focused on the Cooper Basin.
The share price of Warrego Energy is currently up 9% to 37.7 cents (ASX: WGO).
Australia’s Strike Energy has made a $310 million bid for Warrego Energy, claiming that its offer is superior to that of Hancock Prospecting.
Image: Strike Energy – Perth Basin, WA
Hancock Prospecting, owned by mining magnate Gina Rinehart, had previously made a $296 million bid for Warrego. However, Strike Energy argues that its offer is more attractive due to its focus on the Cooper Basin, where Warrego holds many assets.
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When the battle first began
Strike Energy, which controls the other half of the gas field, made an all-scrip offer to Warrego in November, sparking the intensifying competition for Warrego and its 50% holding in West Erregulla. When Gina Rinehart’s Hancock Energy offered 28 cents per share for Warrego, Kerry Stokes’ Beach Energy soon responded with a cash offer of 20 cents per share but withdrew from the competition.
Following news that fellow Western Australian billionaire Chris Ellison’s Mineral Resources had reportedly acquired about 15% of its target for 35 cents, Gina Rinehart’s Hancock Energy has increased its offer for Perth Basin gas player Warrego Energy by almost 30% to $440 million, or 36 cents per share.
According to Strike Energy, its offer includes a “significant premium” to Warrego shareholders and is backed by a “fully funded” development plan for the company’s assets in the Cooper Basin. The company believes this development plan will create greater value for Warrego shareholders.
In contrast, Hancock’s bid is reportedly not backed by a specific development plan, which has led Strike Energy to claim that its offer is more attractive to Warrego shareholders.
Warrego at a glance
Warrego Energy Limited, a locally owned and publicly traded company, makes money by exploring and developing oil and gas resources. The business operates in Spain and Australia, and its head office is in Perth, Western Australia. (Source: IBISWorld&Warrego Energy)
Under the stock symbol WGO, Warrego Energy Limited is listed on the Australian Securities Exchange.
The company’s main projects include:
- EP469: an oil and gas development located in the North Perth Basin.
With potential gas volumes up to 1.6TCF and features resembling those of the Waitsia field, West Erregulla is a significant standalone conventional gas possibility.
In exchange for an AU$11 million investment in the drilling campaign, which resulted in the well-being spud in May 2019, Warrego (ASX: WGO) farmed 50% and operatorship of the permit to Strike Energy in 2018. The asset’s designation as a tier 1 conventional gas potential has been validated thanks to subsequent seismic reprocessing by Strike, which turned up greater resource estimates and an extra tertiary drilling target.
- EPA-0127: an exploration permit located in the Perth Basin.
- El Romeral is a 50.1% integrated gas production and power station joint venture in southern Spain.
- Tesorillo: held through an 85% interest in Tarba Energia SL, the petroleum exploration licences are located in Cadiz, Spain.
Image: Warrego Energy – Tesorillo project in Cadiz, Spain
Warrego’s final decision
The final decision on which offer to accept will be up to Warrego’s board of directors and shareholders. It remains to be seen which company will ultimately succeed in acquiring Warrego.
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