Wesfarmers, Hancock Prospecting and Mitsui in picture for Mineral Resources’ gas assets in Perth Basin | The Australian

Perth-based conglomerate Wesfarmers is believed to be among the parties taking a look at the Perth Basin assets of the Chris Ellison-backed Mineral Resources.

But most believe the contest will come down to either Gina Rinehart’s Hancock Prospecting or Mitsui as the most likely buyers.

Mitsui would almost certainly partner on its bid with the Kerry Stokes-backed Beach Energy, so it could once again be a contest fought out by the billionaires in Western Australia.

Strike Energy would also likely take a look.

Wesfarmers is understood to assess acquisitions of most energy assets in WA on offer, but rarely emerges as a buyer, as the Kmart and Bunnings owner remains more focused on clean energy opportunities.

The conglomerate is energy hungry, with its fertiliser manufacturing plant at Kwinana a big energy consumer.

Another possible suitor could be The Carlyle Group.

The understanding is that Mitsui, with Beach Energy in tow, is keen to pay about $500m for the gas assets, but the asking price of Mineral Resources, led by Mr Ellison, is closer to $1bn.

One way around the impasse is that a buyer acquires the assets for $500m with a further $500m contingent on the assets achieving certain financial hurdles.

Beach Energy would have enough cash on its balance sheet for an acquisition worth about $250m.

Whether a deal gets done may depend on whether Mitsui’s Japanese head office signs off on a transaction, potentially insisting it first delivers on its Waitsia gas project because it is already delayed and over budget.

DataRoom first revealed in August that Mitsui was circling the Perth Basin assets of Mineral Resources and later revealed it had lobbed a bid, prompting the company backed by billionaire Mr Ellison to run an auction for the assets.

Within the onshore Perth Basin, Mineral Resources has the Lockyer conventional gas project development, for which it bought in Norwest Energy as a minority joint venture partner.

It then purchased Norwest and pushed ahead with exploration activities across its Perth Basin permits, drilling six wells over two years.

Mitsui owns the Waitsia gas plant with Beach Energy, and there would be efficiencies to be gained by acquiring more gas to process through that infrastructure.

It is also probably short of gas.

Mineral Resources has been looking at ways to strengthen its balance sheet to fund projects including its Onslow iron ore project.

In 2018, Mineral Resources and Mitsui entered a battle to buy oil and gas group AWE, with Mitsui winning the asset for more than $600m.

AWE’s key asset was a 50 per cent stake in the Waitsia gas field, which had been described as the biggest conventional onshore gas discovery in Australia in decades.

MinRes said it would assess joint-venture partnerships as well as full or partial-sale options.

Mineral Resources generates much of its income from its three iron ore hubs – Onslow Iron in the west Pilbara, Utah Point in Port Hedland and Yilgarn in Esperance.

I didn't expect to be in profit on my cost base in barely a couple of weeks from the pits - I was prepared to tough it out for months! Shows how quickly sentiment turns in markets.