ASX-listed oiler, 88 Energy, has gone unconditional on its all-scrip takeover bid for Alaskan neighbour, XCD Energy, after picking up 59 per cent of XCD’s shares and nearly 29 per cent of XCD’s listed options. The offer of 2.4 88 Energy shares for each XCD share held and 0.7 88 Energy shares for each XCD listed option is now final, unconditional and will not be increased.
XCD Energy shareholders currently have until June 25th to accept the offer unless it is extended or withdrawn and the boards on both sides of the proposed transaction are supportive of the deal.
88 Energy said all XCD shareholders and listed option holders who accepted the offer before it was made unconditional would receive their 88 Energy shares by the 26th of June. Others who accept later will receive their consideration within seven business days of their acceptance being processed.
Whilst 88 Energy’s offer was originally valued at US$50 per barrel in a very volatile oil price climate, the Independent Expert continues to conclude the offer is reasonable, even as oil prices hover in the US$35-40 range, depending on the benchmark used.
88 Energy said it urged all XCD Energy security holders who have not yet accepted the offers to accept without delay and take advantage of the accelerated payment terms to become an 88 Energy security holder. The company said failure to accept could lead to XCD shareholders remaining a minority shareholder in XCD with reduced influence on the future running of XCD’s business.
With the take over bid looking like it is close to done and dusted, the David Wall-led 88 Energy will be looking to use the summer hiatus in drilling activity up on Alaska’s uber-oil-rich North Slope to look at ways to integrate XCD’s Peregrine project located west of 88 Energy’s Icewine project into its expanded land bank.
With Peregrine located just south of a number of recent, large oil discoveries made by US-based operators, 88 Energy’s management will no doubt be tarting up its farm-out brochure to draw in another independent oiler to fund its next oil test well.
88 Energy said in its bidder’s statement released earlier this year, that XCD shareholders would benefit from 88 Energy’s established oil exploration and appraisal capabilities to be deployed across the three complimentary lease areas, namely 88 Energy’s Icewine and Yukon projects and XCD’s Peregrine project. No doubt the savings in corporate overheads will help to minimise the company’s cash burn while it hunts for a new farm-in partner.
XCD Energy said the recent ConocoPhillips-operated Harpoon oil discovery is located only 15km northwest of XCD’s Harrier prospect within the Peregrine project. Peregrine’s three best prospects have a total prospective resource of over 1.6 billion barrels of oil – a potential company making asset if future exploration drilling is successful.
If the takeover completes, the combined group will have a net lease position of around 520,000 acres, or over 2,100 square kilometres in one of the world’s oiliest basins.
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