Gina Rinehart may join Posco International’s $900m bid for Queensland’s Senex Energy
Gina Rinehart may join Posco International as a partner for its $900m takeover tilt for Queensland gas producer Senex Energy.
Queensland gas producer Senex Energy has recommended an improved $900m takeover offer from Posco International, with the South Korean firm considering bringing on Gina Rinehart’s Hancock Energy as a potential investment partner.
The Korean steel maker’s international arm lifted its bid for the local oil and gas player to $4.60 a share plus a 5c per share dividend for the December half, following three previous offers of $4.40, $4.20 and $4 a share.
Senex plans to recommend the deal with Posco also in talks about Hancock becoming a joint owner with a minority stake. The duo are already partners in Ms Rinehart’s Roy Hill iron ore mine in Western Australia’s Pilbara.
Hancock approached Posco about a joint tilt for the gas producer after buyout talks were made public. While Senex said it was open to sharing information with Hancock, Posco stressed the involvement of the iron ore billionaire was not a condition of its takeover offer proceeding.
Posco owns a string of oil and gas projects through Asia, Peru and Oman and also holds existing investments in Australia including a minority stake in Whitehaven Coal’s Narrabri mine in NSW. The Senex move is seen as part of the Korean company’s global diversification strategy and it is expected to retain Senex’s focus on supplying Australia’s east coast gas market should the deal proceed.
Ms Rinehart’s Hancock has previously backed Victorian gas explorer Lakes Oil which fought a ban on unconventional gas exploration in the state.
Posco’s exclusivity period has been extended to November 26 while the Korean company has concluded its due diligence, initially granted on October 18.
The change in Posco’s bid structure to a scheme of arrangement, rather than the previous off-market takeover plan, would stretch the timeline for completing a deal but also leave the door open to potential counter-bidders emerging, sources following the process said.
Santos is seen as a logical bidder for Senex given its dominant east coast gas position, although the Adelaide based producer is already juggling a giant $21bn merger with Oil Search and faces renewed deadline pressure to execute that deal before year-end.
“Assuming another bidder comes over the top with a higher offer is speculative, but in our view certainly a possibility,” Morgans analyst Adrian Prendergast said.
Senex shares were up 2.2 per cent at $4.56 in a slightly lower market on Monday afternoon.
Senex also announced plans to pay $80m for two gas fields from Australia Pacific LNG, adjacent to its own Atlas project, in a move that will boost Atlas production to 30 petajoules a year in 2024.
“The acquisition of these undeveloped gas fields adjacent to Atlas continues Senex’s growth trajectory in the Surat Basin and reinforces the company’s low-cost, hub-and-spoke infrastructure operating model,” Senex chief executive Ian Davies said.
Its production focus is on gas from Queensland’s Surat Basin, where it is expecting a rapid growth in output and revenue as supply lifts from its Roma North and Atlas gas projects.
Mr Davies, who is also vice chairman of the Australian Petroleum Production & Exploration Association, has previously warned the threat of greater regulatory reach into the domestic gas industry could backfire on federal politicians as large users campaigned for intervention to lower prices.
Big manufacturers like Qenos, Orica and Incitec Pivot complained they were unable to strike competitive long-term deals for gas to supply their plants, placing them at a disadvantage to international rivals.
Incitec said on Monday it will close its Gibson Island manufacturing centre at the end of 2022 at a cost of 170 jobs, blaming high gas prices for the decision.
The company “reluctantly” made the decision to shutter the 50-year old fertiliser plant after failing to land a long-term gas contract at acceptable rates.