Hancock Prospecting – the company of billionaire Gina Rinehart – could be eyeing a possible buyout of the $578m Strike Energy ahead of soaring demand for additional energy.
It is understood that the company of Mrs Rinehart holds a stake in Strike Energy below 5 per cent.
As the joint venture partner for its Western Erregulla operations in the Perth Basin, its interest in the Australian-listed gas explorer is logical.
Strike currently operates the project, and expectations are that the right to operate the asset is appealing to Mrs Rinehart.
But if Western Australian Premier Roger Cook allows exports of onshore gas from the state, the buyer universe for Strike is likely to widen considerably.
The outcome of that review by the government is expected out this month.
Beach Energy and Mitsui have a large gas plant with the need for capacity, and a deal involving Strike Energy could also be appealing if the timing were right.
Strike’s share price almost halved in February when the findings from its South Erregulla well testing came up with worse-than-expected results in a development that proved a major blow to the company.
The Western Erregulla gas field is ready to take a final investment decision (FID) in the third quarter.
Working to Strike Energy’s advantage is that it does not have assets with remediation liabilities and operates everything it owns.
Its flagship projects are fully drilled and tested, with half a trillion cubic feet of gas next to the Waitsia gas field.
Strike bought its maiden natural gas project, Walyering, on stream in September last year.
The company’s near-term focus is the development of the significant gas discoveries at South and West Erregulla, in WA’s Perth Basin.
It operates in the Permian Gas Fairway in the Perth Basin, where Strike has a dominant position and could grow into one of Australia’s largest onshore gas resources.
Last year, Hancock ousted Strike Energy and Beach Energy in a quest to gain control of Warrego Energy at 36c a share.
Mineral Resources, backed by billionaire Chris Ellison, also entered the frame with a major strategic stake in the target.
He sold it to Mrs Rinehart, moving her into a position holding more than 50 per cent of the stock and effectively gaining control of the junior WA explorer.
Hancock is keen to lock in gas supplies long term for its Western Australian mineral development aspirations.
Strike Energy’s share price last traded at 19c and has previously worked with Macquarie Capital.
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