Ann: Takeover Offer for Warrego, page-55

Strike raises bid for Warrego, taking on Rinehart - AFR

Snippets:

West Australian gas player Strike Energy has launched a sweetened takeover bid for in-demand target Warrego Energy as it goes head-to-head with Gina Rinehart’s Hancock Prospecting for control of the Perth Basin producer.

Shares in Warrego jumped as much as 13.3 per cent on Monday morning after Strike, chaired by WA businessman John Poynton, said it is bypassing the board of Warrego with a direct offer of one of its shares for each share in the target. Warrego is also in the sights of Hancock and previously also fielded a bid from Beach Energy, which subsequently withdrew from the rapidly escalating takeover tussle....

....Strike, Warrego’s partner in the field, has already secured a blocking stake of 19.9 per cent in Warrego through a one-for-one share exchange deal with various Warrego shareholders and on Monday also announced a $153 million financing package with Macquarie Bank to support its gas development ambitions.

The takeover battle for Warrego comes as the various players manoeuvre to secure a bigger foothold in the onshore Perth Basin gas province, which has long been seen as a hotspot for consolidation amid growing demand for gas in WA. Late last week, WA billionaire Chris Ellison joined the fray, launching a $403 million takeover bid for Norwest Energy, another junior in the Perth Basin region....

...Hancock has yet to respond to the Strike move, but Euroz Hartleys suggested that Hancock could turn its attentions from Warrego to Strike instead.

“Could this be the point where Hancock Prospecting exits the race for WGO and instead turn its eyes to acquiring STX instead?” Euroz Hartleys analyst Declan Bonnick said in a note. “We will have to see whether STX’s bid is endorsed by the WGO board as a superior proposal, which on an implied value basis it is.”

Mr Bonnick said all eyes would be on Strike and its attractiveness for major bidders due to its strong position in gas acreage in the Perth Basin, not just through its 19.9 per cent stake in Warrego. He suggested that Woodside Energy and other North West Shelf LNG players such as Mitsui could still enter the fray as they look to secure gas for the LNG trains at Karratha, while Santos is also looking to secure gas in WA, not only to fulfil its existing contracts but for its own growth....

...Strike chief executive Stuart Nicholls said that if Strike gains control of Warrego, it would be able to accelerate and optimise gas production, cash flows and capital for the Erregulla gas product.

“We intend to put this offer directly to the shareholders of Warrego to give them the opportunity to participate in the clear value creation we can see from this transaction,” Mr Nicholls said. “Regardless of the Warrego board of directors we trust the Warrego shareholders to recognise the inherent value of their existing interest in West Erregulla and the potential enhancement to that value arising out of a combination of the two companies.”

The funding deal with Macquarie includes refinancing of an existing $33 million of debt, $40 million of new debt to support drilling at South Erregulla and $80 million for the Erregulla domestic gas project.

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