MinRes buy-up could help Gina land Warrego

MINERAL Resources could deliver effective control of Warrego Energy to Gina Rinehart’s Hancock Energy, after the company’s dramatic intervention into the ongoing takeover battle this week.

The Chris Ellison-led company is understood to have bought about 15 per cent of Warrego stock on Wednesday at 35c a share, including Regal Funds Management’s 9 per cent stake and shares held by other institutional investors.

Mrs Rinehart’s Hancock Energy immediately added 8c a share to its cash offer on Thursday, taking its bid to 36c a share if it gained control of more than 40 per cent of the Warrego register.

About 25.9 per cent of Warrego stock had been accepted into the offer by December 30, meaning MinRes could effectively hand control of Warrego to Mrs Rinehart if it flipped its shares into the Hancock bid at the small premium on offer.

MinRes is yet to comment on its dramatic intervention into the bidding war for the Perth Basin gas play, but its market move deals a major blow to the all-scrip offer by Hancock rival Strike Energy, which has offered one of its shares for each Warrego share on offer.

Strike owns 19.9 per cent of Warrego, and until MinRes’s foray into the market believed it was likely to pick up another 20.5 per cent of the company’s shares when its offer opens next week.

MinRes is understood to have bought the majority of that stake out from underneath Strike.

But despite the 28.5 per cent lift in the value of Hancock’s offer for Warrego, the market clearly still does not believe the bidding war is done, lifting the value of the company’s shares by 3.5c to a 38c close on Thursday. Strike shares also benefited from the twin moves, with its shares rising 4c to 37.5c on Thursday.

At stake in the Warrego takeover battle is the development-ready West Erregulla gas project in WA, in which Strike and Warrego each own a half-share, which the companies say could produce 87 terajoules of gas a day if approvals were granted.

Like MinRes, Strike has plans to use the gas for future downstream projects, having floated the prospect of building a $3.5bn urea plant in WA using gas produced from its local acreage.

While MinRes’s intentions for its Warrego stake are not yet clear, the company has long had an extensive relationship with Mrs Rinehart’s WA mining operations. Currently the two companies are involved in a joint venture to develop new iron ore shipping berths at Port Hedland.

MinRes shares closed 0.8 per cent at $78.12.