Article by Perry Williams courtesy of the Advertiser.
Billionaire Gina Rinehart and South Korea’s Posco International have won control of Senex Energy following a shareholder vote with the Queensland gas producer forced to defend the value of the deal amid a rapid surge in oil prices.
The takeover was voted through even as some investors questioned the value of the $900m buyout given oil prices had surged to a 14-year high touching nearly $US140 a barrel due to supply jitters following Russia’s invasion of Ukraine.
Senex chairman Trevor Bourne said it had given “careful consideration” to commodity price inflation but said that it would take a “brave person” to predict the medium to long-term trajectory of energy prices given significant volatility.
Mr Bourne told shareholders a “yes” vote would mean a “certain cash price” for their investments in the energy business.
“If the scheme proceeds, you will receive a certain cash price for your investment in Senex and will avoid ongoing risks and uncertainties involved in Senex’s operations and future developments,” Mr Bourne said in a speech on Tuesday.
Australia’s top oil and gas companies including Santos and Woodside Petroleum last week warned “off the charts” energy prices are set to remain high given the inability of producers to quickly bring on new production with sanctions and restrictions on Russia sparking a global hunt among buyers to secure supplies.
An independent expert last month backed the deal which will see the Queensland gas producer taken private.
Hancock first approached Posco about a joint tilt for the gas producer after buyout talks were made public with the duo already partners in Ms Rinehart’s Roy Hill iron ore mine in Western Australia’s Pilbara.
Hancock will pick up a 49.9 per cent stake in Senex with the deal following it recording a massive $7bn profit, one of the biggest results for a private company in recent memory.
Hancock Energy chief executive Stuart Johnston, who previously worked for rival iron ore billionaire Andrew Forrest, was named as a director of K-A Energy, the vehicle being used to buy Senex.
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.
Senex in November 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.
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.
Woodside Petroleum said a huge spike in Asian LNG spot prices to the “off the charts” equivalent of $US500 a barrel, four times higher than oil, had sparked global concerns over energy security.
Sanctions and restrictions on Russia, the world‘s fourth largest LNG producer and supplier of 40 per cent of Europe’s gas, have created a race to find alternate volumes among buyers.