Gina Rinehart’s Hancock Prospecting has struck a deal to buy Mineral Resources’ Perth Basin gas assets for up to $1.13 billion and pledged to accelerate their development.
Gina Rinehart’s Hancock Prospecting has struck a deal to buy Mineral Resources’ Perth Basin gas assets for up to $1.13 billion and pledged to accelerate their development.
Hancock will acquire 100 per cent of the Lockyer / North Erregulla gas project – one of the largest gas discoveries in the Perth Basin.
It will also acquire 50 per cent of the remaining petroleum acreage MinRes currently holds in the Perth Basin (beyond Lockyer) and the Carnarvon Basin, as well as 50 per cent of MinRes’ Explorer drill rig.
“I welcome the opportunity to work alongside my friend Chris Ellison and his MinRes team,” Mrs Rinehart said this morning.
It adds to a joint venture the two companies established three years ago to build a new export berth at Port Hedland’s South West Creek.
Today’s deal makes Hancock one of the largest gas acreage holders in onshore WA.
The privately-owned company “intends to make use of its strong financial position to progress this exceptional project”.
“Hancock will evaluate opportunities to accelerate development at Lockyer, and enable production to be brought to market as soon as possible,” the company stated.
The acquisition follows on from Hancock’s purchase last year of Warrego Energy for $450 million.
A key step in winning the contested battle for Warrego was MinRes’ decision to sell its minority stake in the takeover target to Hancock.
The Warrego purchase gave Hancock a 50 per cent stake in the adjacent West Erregulla gas field, with the balance held by Strike Energy.
“Hancock will undertake a review of its interests across the Perth Basin to identify opportunities and synergies, including the location and size of gas processing infrastructure,” it stated this morning.
Today’s deal marks a strategic shift for MinRes, with the company having previously said it was keen to develop its gas assets to provide assured energy for its mining operations.
MinRes said the $1.1 billion deal accelerates value for shareholders from its exploration success and de-risks near-term exploration and development by reducing capital requirements.
The deal will bolster the company’s balance sheet, enabling it to cut debt, and comes one month after it sold a 49 per cent interest in another key asset, its Onslow Iron haul road, also for $1.1 billion.
Shareholders welcomed the news, with MinRes shares up 16 per cent to $41.88 in early trade.
This adds to a stunning recovery in the company’s share price after a 25 per cent sell-off last week, triggered by speculation surrounding Mr Ellison’s tax affairs.
Under today’s deal, Hancock will pay $804 million up-front and up to a further $327 million subject to meeting certain resource thresholds for the Moriary Deep prospect and the Lockyer gas and Erregulla oil discoveries.
This was expected to occur during FY25 after further drilling has been undertaken.
MinRes will retain a 50 per cent stake in a new exploration joint venture and continue as operator but noted that, if a commercial discovery is made, Hancock has agreed to fund 100 per cent of the development costs.
Mrs Rinehart used today’s announcement to highlight the importance of gas and to commend a recent policy shift by the WA government.
“Gas is critical to underpin base load power requirements and support local industry with the provision of reliable energy,” she said.
“Indeed, it is essential, for the nation to be able to function, given solar power is only effective some 10-25% of the time, and wind power approximately one-third of the time.”
She repeated her call for “less government tape” to support a timely development decision but also praised the move to allow exports from onshore gas fields.
“I would like to acknowledge West Australian Premier Roger Cook’s recent positive policy change to allow gas exports and encourage the development of additional onshore gas projects, which will enable more supply to local customers,” she said.
“Enabling more sales to higher-priced customers overseas enables marginal or uneconomic gas fields to supply locally, that otherwise would not be economic to develop.
“Just like lifting rent controls in Argentina has proven greater supply of rental accommodation, lower prices for customers and more diversity of choice.”