(Alliance News) - Australian firm 88 Energy Ltd on Monday said it plans to make an off-market takeover offer for oil exploration company XCD Energy Ltd.
XCD has operations in the US state of Alaska, located on the North Slope - where 88 Energy's focus also lies. 88 Energy is offering 1.67 new 88 Energy shares for every XCD Energy share and 0.5 new 88 Energy shares for every XCD Energy listed option.
This deal values XCD Energy's shares at 1.0 Australian cents, each and its options at 0.3 cent each, with the XCD Energy shares at a 100% premium to the 0.5 cents closing price of XCD Energy shares on April 24 and the options an 85% premium to the volume weighted average price of all trades in said options since their listing in February 2020.
In total, the proposed offer values XCD's equity at about AUD7.5 million, GBP3.9 million.
According to 88 Energy, such a merger would create "an Alaska focused oil explorer" with XCD security holders holding up to 15% of the combined group.
According to 88 Energy: "Constructive discussions took place between 88E and XCD directors over the weekend; however, the short timeframe prevented execution of a bid implementation deed. We look forward to continued discussions in anticipation of an agreement, including securing a recommendation from the XCD directors; however, there is no guarantee that this will occur."
David Wall, 88 Energy's managing director, said: "In a combined company, XCD Energy shareholders and listed option holders will be able to leverage from 88 Energy's geological and operational expertise, specific to the North Slope of Alaska, where we have drilled four wells as operator and acquired several 2D and 3D seismic surveys over the last five years. This includes extensive technical knowledge of the regionally successful Brookian oil plays, in which 88 Energy retains significant upside exposure via its highly prospective portfolio of exploration/appraisal projects covering [approximately] 250,000 net acres (480,000 gross) co-located on the North Slope."
Shares in 88 Energy ended down 1.6% at 0.24 pence on Monday in London.
By Anna Farley; annafarley@alliancenews.com
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88 Energy (88E)