Ann: 4Q22 Quarterly Activities Report & 5B, page-30

From AFR

Strike Energy boss Stuart Nicholls has warned mining billionaires Gina Rinehart and Chris Ellison to think twice if they are counting on cheap gas from the West Erregulla project to power their operations.

Mr Nicholls suggested that if Strike is ultimately unsuccessful in its takeover tilt at Warrego, it will use its hefty stake to make sure Mrs Rinehart’s Hancock Energy and Mr Ellison’s Mineral Resources pay full market price for gas.

The takeover battle for Warrego, involving Strike, Hancock and MinRes, took an expected turn on Tuesday when Hancock extended its all-cash bid to February 10.

The move came on the day Hancock’s $440 million conditional cash offer from Warrego was due to expire.

Hancock, which is offering 28¢ per share for Warrego or 36¢ if it gains at least 40 per cent of the stock, holds just over 26 per cent of the target.

Strike, Warrego’s partner in the West Erregulla project in the Perth Basin, has a 21 per cent stake and is offering one of its

shares for each one of Warrego’s.

MinRes has said it does not intend to make a takeover bid, but grabbed a 19.2 per cent in Warrego last month as Hancock and Strike battled for control.

Both Hancock and MinRes have said they want to use gas from the Perth Basin to power their mining operations and potentially in downstream processing.

In a report in The Australian Financial Review on Monday, Hancock Energy boss Stuart Johnston said “the reason for us looking for gas in the west is really to support our own operations for the next couple of decades”.

Mr Nicholls foreshadowed a situation where if Strike was unable to lift its stake in Warrego to more than 50 per cent and Hancock and MinRes controlled the board, it would use related party transaction provisions to make sure they paid full market price for gas.

“Given Hancock’s disclosure yesterday that they would want to use Warrego’s gas for their own mining and mineral processing operations, someone might want to remind them that if they aspire to control the board of Warrego and sell themselves gas from West Erregulla, that would form a related party transaction and would require approval from the non-related parties (Strike in this instance),” he said.

“And unless Hancock is in the market for $10 a gigajoule gas, I can’t see how that would be in Warrego shareholders’ best interests.”

Neither Hancock or MinRes has suggested they foresee paying less than market price for gas from West Erregulla.

Meanwhile, MinRes has increased its stake in takeover target Norwest Energy, another Perth Basin player and minority partner in the MinRes controlled Lockyer Deep project, to almost 24 per cent.