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(Sharecast News) - 88 Energy announced plans to merge with XCD Energy on Thursday, to form an oil exploration company with operations on the North Slope of Alaska, with a platform of growth prospects.
The AIM-traded firm said it would acquire XCD via a "unanimously recommended" off-market takeover offer, with 2.4 new 88 Energy shares for every XCD Energy share held, and 0.7 new 88 Energy shares for every XCD listed option held.
It said XCD's board unanimously recommended that their securityholders accept the improved offers, in the absence of a superior proposal and subject to the independent expert concluding that the offer was fair and reasonable.
88 Energy said the share offer values the XCD shares at 1.2 cents each, representing a 71% premium to their closing price on ASX on 6 May, of 0.7 cents.
The option offer, meanwhile, valued the XCD Energy listed options at 0.35 cents each, representing a 116% premium to the volume-weighted average price of all trades completed on the ASX since the options were listed on 25 February, up to and including 6 May.
It said the merger would create an Alaska-focussed oil explorer, with a diversified portfolio in three key project areas - Project Icewine, the Yukon Leases and Project Peregrine - all at various stages of project maturity.
The board, management and technical team would have "proven operational capability", and a "track record" for delivering on project objectives, along with access to an extensive network of global and Alaskan relationships, both commercial and technical.
88 Energy said it would also result in increased scale, market presence, funding capability and share trading liquidity across ASX and AIM.
XCD securityholders would hold approximately 20% of the combined group, thus retaining exposure to the potential future upside of the Brookian oil plays across both sets of assets, and mitigating and diversifying exploration risk while gaining exposure to 88 Energy's assets, balance sheet and farm-out expertise.
They would also benefit from the combined group's strong exploration and operating expertise, enhanced financial strength, and the ability to optimise exploration activity across an enlarged portfolio.
XCD Energy shareholders had entered into pre-bid acceptance agreements with 88 Energy over 18.5% of shares on issue, and 6.8% of listed options on issue.
"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, safely and within budget, and acquired several 2D and 3D seismic surveys over the last five years," said managing director David Wall.
"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 and appraisal projects covering 330,000 net acres co-located on the North Slope.
"88 Energy's board is confident that merging the assets of 88 Energy and XCD Energy, combined with the potential upside offered, places the combined group in a strong position to fill the growing investment void in the ASX [and] AIM listed oil and gas sector."
At 1538 BST, shares in 88 Energy were up 8% at 0.27p.
8 Jan 2024 16:15
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