When Norwest directors recommended shareholders accept Mineral Resources’ (MinRes) increased takeover offer earlier this week, it solidified the latest chapter in an increasingly competitive battle for gas assets in the Perth Basin.
Norwest Energy and Mineral Resources (MinRes) have reached an agreement in their months-long takeover talks, with Norwest directors urging shareholders to accept the increased takeover offer of $497 million.
MinRes initially made an unsolicited $403 takeover bid for Norwest in December last year. And while MinRes managing director Chris Ellison called the offer a “no-brainer”, Norwest knocked back the deal earlier this month, calling it “opportunistically timed”.
“MinRes is seeking to secure control of Norwest and its Perth Basin assets without paying an appropriate premium,” Norwest said in a statement at the time.
“Accepting the offer would reduce shareholder exposure to the Lockyer project … while increasing their exposure to the risks associated with MinRes’ other businesses and commodities.”
The Lockyer project is a major gas discovery in WA’s Perth Basin that is seen as a future source of inexpensive gas to power downstream processing in the resources-rich state.
MinRes’ sweetened offer of $497 million, which also waived the defeating condition to its offer such that the revised offer will be unconditional, won over the Norwest board.
“The Norwest board is satisfied that MinRes’ improved offer is now a good deal for shareholders, and in the absence of a superior offer, unanimously recommends shareholders should ACCEPT the revised offer before it closes,” Norwest chair Ernie Myers said.
“We have worked with MinRes in the interest of our shareholders to achieve the valuation and terms reflected in its revised offer.
“The revised offer provides Norwest shareholders with an opportunity to maintain an interest in the Lockyer project through an investment in MinRes, being a company with significantly greater balance sheet strength and underpinned by a diverse portfolio of operations.”
MinRes’ successful takeover of Norwest may mark a new chapter in mining companies’ race to get their hands on WA gas assets.
In addition to this latest deal, Gina Rinehart’s Hancock Prospecting remains in a holding pattern in its takeover efforts of efforts of Warrego Energy.
Hancock upped its bid to $0.36 per share earlier this month, valuing Warrego at $440 million.
Warrego Energy has proven to be an especially hot commodity in WA, with Hancock Prospecting currently in a battle with Strike Energy for control of the Perth Basin company.
Kerry Stokes-backed Beach Energy had also previously been in the takeover mix but bowed out of the race in December 2022.
And although MinRes reportedly entered the fray for Warrego by buying up 15 per cent of the energy company earlier in January, Ellison last week ruled out a full takeover bid.
The jewel in the Warrego takeover crown is the West Erregulla gas field 230km north of Perth.
The site is said to be a source of inexpensive gas for power generation and mineral processing, which will prove especially important as the resources sector faces a more difficult fossil-fuel market in coming years.
In the face of an ongoing energy crisis and deceasing gas supplies following Russia’s invasion of Ukraine, access to gas assets such as those in the Perth Basin has become an especially hot ticket in the resources sector.
Time will tell how far mining companies are willing to go to get their hands on these vital energy reserves.