Strike Energy has moved to a 19.9 per cent stake in takeover target Warrego Energy

The move will give Strike a potential blocking stake in any bid to acquire the company, and comes after its own proposal was superseded by a bidding war between two billionaires.

Strike Energy says it has moved to a 19.9 per cent stake in Warrego Energy, its partner in the sought-after Perth Basin gas field and the target of takeover offers from the Kerry Stokes-backed Beach Energy and Gina Rinehart’s Hancock Prospecting.

The move will give Strike a potential blocking stake in any bid to acquire the company, and comes after its own proposal to purchase Warrego last month was superseded by a bidding war between the two billionaires.

Strike said on Wednesday it had increased its holding in the company to 19.9 per cent, up from the 8.2 per cent it owned when it announced a scrip bid for Warrego on November 10.

Beach has until Monday to match a takeover proposal for Warrego before its board recommends investors back Hancock’s 28c per share takeover bid. That offer lobbed on Friday, trumping a 25c per share bid from Beach.

However, Beach has also proposed to return proceeds from the sale of Warrego’s Spanish assets – an undeveloped gas prospect in the Cadiz province and the El Romeral project – if they can be offloaded within 12 months.

Strike’s move to snap up a 19.9 per cent stake in Warrego would give the company a veto over any deal with Beach, although Hancock’s offer does not have a conditions on minimum acceptance – it will uy up any shares it is offered, regardless of whether a full takeover is achievable.

Strike’s scrip bid is currently priced at 0.775 shares, which values it at 26.7c, slightly lower than the Hancock offer.

Strike said on Wednesday the increase in its Warrego holding also increased its direct and indirect holding in the EP649 tenement, which contains the West Erregulla gas field, to about 60 per cent. Strike and Warrego are partners in the West Erregulla project in the Perth Basin.

Strike told shareholders that they should not make any assumptions about its intentions regarding the increased stake.

“For the avoidance of doubt, Strike’s board has not formed any intention with regards to any future transaction that may involve Warrego, and Strike is currently considering all available strategic options,’’ the company said in a statement on Wednesday.

Strike shares ended the day 7.4 per cent higher, up 2.5c at 36c. But shares in Warrego fell 3.2 per cent – or 1c – to close at 30c. They have risen 90 per cent in one month. Beach shares fell 9.9 per cent, or 18c, to close Wednesday at $1.64.

The Perth Basin, where Beach is also operating, is highly sought after. Jarden brokers Nik Burns and Michael Thomolaris said in a note to clients that – irrespective of its next steps relating to Warrego – the Hancock bid had “highlighted the value of gas in the Perth Basin”. Mr Burns and Mr Thomolaris increased their valuation estimates for Beach’s exploration potential in the area – assuming six wells are drilled – to an unrisked $900m.

Last week, Petra Capital analyst Kieran Barratt wrote in a note to clients: “Despite numerous bids, we believe this still undervalues Warrego and references the Mitsui/AWE deal in 2019, which transacted at $1.20 a gigajoule of 2P Reserve of $1.92 a gigajoule adjusted for gas price differential.”

Originally published as Strike Energy has moved to a 19.9 per cent stake in takeover target Warrego Energy