MinRes potentially exploring sale of energy arm: E&P Capital
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More news: E&P Capital believes Mineral Resources is "actively exploring a sale of its energy business" after the mining group released its maiden resource estimates for the Lockyer gas and Erregulla oil projects in the Perth Basin this morning.
E&P analyst Adam Martin said Beach Energy and Mitsui "could be interested" given the pair's joint venture at the Waitsia gas project has a reserve life of 10 to 11 years. Gina Reinhart's Hancock Energy may also be interested given neighbouring permits and gas discoveries, Martin said.
He noted that a full sale could release more than $500 million, which would strengthen MinsRes' liquidity position and de-risk the investment proposition.
Meanwhile, Martin said that MinRes' contingent sales gas resource of 435 petajoules (PJ) at the Lockyer gas project was in line with E&P's estimate of 300PJ to 500PJ. MinRes' contingent oil resource of 31.6 million barrels of oil equivalent at the Erregulla oil project was "slightly ahead" of management indications, he noted.
However, for MinRes' proposed processing facility to reach the higher end of its target 250 terajoules capacity, it would either need to find more gas or find a partner which already has gas in the Perth Basin, Martin said.
MinRes shares were up 2.6% to $39.33 by 1:20pm AEST, making it one of the best 10 performing stocks across the ASX 200.
MinRes shares gain on resource estimates at Lockyer and Erregulla
The news: Shares in Mineral Resources rose on the ASX after the mining group released initial gas and oil resource estimates for its Lockyer gas project and Erregulla oil project in Western Australia's Perth Basin.
The numbers: MinRes shares were up 1.7% by 11:50am AEST, having shed nearly 45% since January.
The miner estimates that Lockyer holds a contingent gas resource of 435 petajoules of sales gas, with 3.3 million barrels of condensates. The project carries current total prospective gas resource of 1.4 trillion cubic feet of gas.
MinRes also estimates that Erregulla holds a total contingent oil resource of 31.6 million barrels of oil equivalent, which it described as "one of the largest onshore oil discoveries in Western Australia since the discovery of oil on Barrow Island in 1964, with further exploration upside".
The context: MinRes said that planning for the development of Lockyer is "well progressed". It is also reviewing development and partnering opportunities relating to its two exploration permits, in response to inbound queries "from a number of domestic and global parties".
The mining company said it will assess joint venture partnerships, as well as full or partial sale options. Meanwhile, it is considering developing financing options through infrastructure funding partners, as noted in April.
What they said: "Our Perth Basin conventional oil and gas discoveries are among the largest onshore finds in Western Australia, with significant upside on these two exploration permits alone," MinRes managing director Chris Ellison said.
"Developing these resources provides MinRes with yet another option to grow shareholder value through our portfolio of commodities located in the world's best resources jurisdiction," he said.
The sources: ASX announcement, E&P Capital research
