POSCO Inter Completes Acquisition of Senex Energy... "Full-Scale Launch of Eco-Friendly Energy Business"

Global Top-Tier Leap Foundation Laid... "Expected to Contribute to Corporate Value Increase"

[Asia Economy Reporter Yoo Hyun-seok] POSCO International is set to fully embark on its eco-friendly energy business following the completion of its acquisition of Australian energy company Senex Energy.

On the 31st, POSCO International announced that the local shareholder meeting and government approval procedures related to the acquisition of Senex Energy, signed in December last year, have been completed. With this, POSCO International invested AUD 442.42 million (approximately KRW 405.2 billion) to acquire a 50.1% stake, securing management control of Senex Energy.

This marks the first global merger and acquisition (M&A) completed since the launch of POSCO Holdings, signaling POSCO International’s leap to becoming a global top-tier energy company and contributing to the group’s ‘Real Value’ management strategy.

Amid the energy transition era marked by supply chain crises and soaring oil and gas prices, Australia has gained renewed attention. This successful M&A is expected to positively impact corporate value and contribute to national energy security.

The M&A process was not smooth. When the acquisition contract was signed last December, the price of West Texas Intermediate (WTI) crude oil was around $65 per barrel, rising to $90 in February and surging to a maximum of $123 following the outbreak of the Russia-Ukraine war. Morgan Stanley raised its Brent crude oil price forecast for Q3 this year from $100 to $120 per barrel, projecting continued strength in commodity prices.

Based on the sharp rise in energy commodity prices, some shareholders of Senex Energy opposed the sale, causing negotiation difficulties. However, by presenting a vision at the POSCO group level to grow Senex Energy as a platform for energy transition business, the company was able to gain board support and shareholder approval.

Senex Energy owns three gas fields located in Queensland, Australia (Atlas, Roma North, and Louisiana). It is the fifth-largest company in Australia’s oil and gas sector, with a stable revenue model by selling produced gas to LNG liquefaction plants and gas power plants in eastern Australia.

In addition to the gas fields, Senex Energy holds two exploration blocks, Rockybar and Artemis, which could secure additional natural gas reserves upon successful exploration. Senex Energy’s annual production volume is approximately 20 billion cubic feet. As of last year, annual sales were AUD 116 million (approximately KRW 107 billion), EBITDA was AUD 56 million (approximately KRW 51.6 billion), and operating profit was AUD 25 million (approximately KRW 23 billion).

According to an Australian analysis agency, considering an international oil price of $70, Senex Energy’s value is AUD 4.92 per share, higher than the acquisition price of AUD 4.6 per share. With current international oil prices exceeding $100, the corporate value is even higher.

POSCO International plans to strategically enter the hydrogen industry, a key focus of the POSCO Group. Senex Energy has been conducting feasibility studies on hydrogen projects jointly with Queensland power company CS Energy. POSCO International intends to utilize Senex Energy’s existing gas fields to advance blue hydrogen and CCS (carbon capture and storage) projects.

Hancock Energy, a subsidiary of Hancock Prospecting, one of Australia’s leading mining companies, has also joined as a partner to expand business across the energy industry. This participation is expected to enhance business stability and increase Senex Energy’s value.

Meanwhile, the acquisition of Senex Energy is also expected to contribute to national energy security. POSCO International plans to consider domestic supply by liquefying gas produced through additional gas field development via Senex Energy to establish a domestic supply chain. Through the acquisition, POSCO International secured natural gas reserves of approximately 802 billion cubic feet (802 Bcf), equivalent to 44% of South Korea’s annual natural gas consumption of 1.9 trillion cubic feet (1900 Bcf) as of 2019.

Joo Si-bo, President of POSCO International, stated, “The acquisition of Senex Energy is significant as a first step toward securing additional natural gas reserves in the short term and achieving the company’s future strategies of energy transition and carbon neutrality in the mid to long term.” He emphasized, “Through the acquisition of Senex Energy and exploration of blocks in Malaysia and Indonesia, we will solidify our position as a global energy specialist.”

This content was produced with the assistance of AI translation services.