Senex Energy Limited (ASX:SXY) has recommended an improved $900 million takeover offer from Posco International Corporation (KOSE:A047050), with the South Korean firm considering bringing on Gina Rinehart's Hancock Energy as a potential investment partner. The Korean steelmaker's international arm lifted its bid for the local oil and gas player to $4.60 a share plus a 5c-a-share dividend for the December half, following three previous offers of $4.40, $4.20 and $4 a share. Senex plans to recommend the deal, with Posco also in talks about Hancock becoming a joint owner with a minority stake.

The duo are already partners in Mrs. Rinehart's Roy Hill iron ore mine in Western Australia's Pilbara. Hancock approached Posco about a joint tilt for the gas producer after buyout talks were made public. While Senex said it was open to sharing information with Hancock, Posco stressed the involvement of the iron ore billionaire was not a condition of its takeover offer proceeding.

Posco owns a string of oil and gas projects through Asia, Peru and Oman and 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 Posco'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. Mrs. Rinehart's Hancock has previously backed Victorian gas explorer Lakes Oil, which fought a ban on unconventional gas exploration in the state.

Posco's exclusivity period has been extended to November 26, while the Korean company has concluded its due diligence, initially granted on October 18. The change in Posco's bid structure to a scheme of arrangement, rather than the previous off-market takeover plan, would stretch the timeline for completing a deal but also leave the door open to potential counter-bidders emerging, sources following the process said. Santos is seen as a logical bidder for Senex given its dominant east coast gas position, although the Adelaide-based producer is already juggling a $21 billion merger with Oil Search and faces renewed deadline pressure to execute that deal before year-end.

"Assuming another bidder comes over the top with a higher offer is speculative, but in our view certainly a possibility," Morgans analyst Adrian Prendergast said. Senex shares rose 3.1% to $4.60 on November 08, 2021. Senex also announced plans to pay $80 million 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.

"The acquisition of these undeveloped gas fields adjacent to Atlas continues Senex's growth trajectory in the Surat Basin and reinforces the company's low-cost, hub-and-spoke infrastructure operating model," Senex Chief Executive Ian Davies said.