Strike JV partner Talon Energy ignites shareholder fury over bid

afr.com:

Its shareholders at twenty paces at West Australian gas play Talon Energy. Investors, Street Talk understands, are unhappy with the board, who they claim has failed to engage with Strike Energy over a proposal to consolidate the Walyering gas field development where they are joint venture partners.

Strike has four different gas supply projects due to come online by late 2025, starting with the Walyering project with Talon Energy. 

Walyering, located in the Perth Basin, is 45 per cent owned by Talon and 55 per cent controlled by Strike, which is the operator. And the project is facing unexpected delays. But sources said Strike lobbed a take-it-or-leave-it offer at the Talon board last week but walked away after it didn’t hear a peep over the weekend. The $1.1 billion ASX-listed company is understood to have made numerous approaches over the past year, escalating the price.

On the table was 20¢ plus a spin-out of Talon’s 33 per cent interest in Mongolian coal seam gas project Gurvantes. Another listed gas exploration group, TMK Energy, owns the remaining 67 per cent of Gurvantes.

Investors estimate the Gurvantes holding is worth anywhere from an additional 3¢ to 6¢, making the total offer worth up to 26¢ compared to Talon’s last price of 17¢ – representing a 53 per cent premium.

Talon shareholders appear frustrated the board knocked back Strike’s proposal, offering “exploration value” as the only reason. They said that high WA gas prices are irrelevant to Talon as Santos – who has agreed to buy the gas from Walyering for a minimum of 36.5PJ over a five-year period – has a fixed price offtake from the project well below the current spot. Santos also has an option to purchase any excess production at the same price.

Strike