Gina Rinehart trumps Kerry Stokes in battle of billionaires for Perth Basin gas

Gina Rinehart’s Hancock Energy has offered $281 million for ASX-listed Warrego Energy, 15 per cent more than Kerry Stokes controlled Beach Energy’s offer in a battle for a half share in a promising onshore gas development north of Perth.

Three weeks ago Strike Energy, Warrego’s equal owner in the West Erregulla field, kicked off the quest for gas with 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 better offer appeared. That happened on Wednesday when Hancock Energy offered 23 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.

The WA government currently preserves onshore gas for the domestic market but gave an exemption to the Waitsia field. 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.

Stuart Johnson, a director of the energy arm of Rinehart’s Hancock Prospecting, said the “attractive and compelling” offer should be accepted as early as possible. However, the market indicates many investors think the Hancock offer could be bettered with the share price quickly rising to 25 cents share.

Credit Suisse energy analyst Saul Kavonic said acquisitions in the Perth Basin were just starting.