Perth listed oil company, 88 Energy, has made an off-market, all-scrip offer for fellow ASX-listed Alaskan oil chaser, XCD Energy, with a view to expanding its gross lease foot print on Alaska’s oil-rich North Slope by around forty per cent. The offer is subject to a formal bidders statement and 90 per cent acceptances from both XCD Energy shareholders and listed option holders.
The David Wall-led oiler has offered 1.67 new 88 Energy shares for every existing XCD Energy share held and 0.5 new 88 Energy shares for every XCD Energy listed option held which represents a premium of 100 per cent over the closing price of XCD shares on Friday, April 24th of A$0.005.
The offer also represents a 120 per-cent premium to XCD’s volume weighted average share price over the last 10 days. Energy said that XCD shareholders would hold up to 15 per cent of the newly-combined group if the offer was successful.
If the takeover is ultimately successful, the combined group will have a material working interest in around 680,000 gross acres, or over 2,700 square kilometres under lease in one of the world’s super basins, with over 16 billion barrels of oil produced from fields in the region like the giant, multi-billion barrel Prudhoe Bay oil field and yet over 28 billion barrels remain to be produced, according to XCD.
XCD Energy has 195,373 acres with a 100 per cent working interest in leases that lie about 40 kilometres south of the giant Willow oil field that has 750 million barrels of oil reserves. This lease position is also due west of 88 Energy’s Icewine project where it has control of 480,000 gross acres, some of which even straddle the trans-Alaskan pipeline.
Whilst XCD Energy’s leases are 100% owned by the company, some of 88 Energy’s leases have other working interest partners, so the total of net acres currently held by 88 Energy is closer to 250,000 across its portfolio.
88 Energy said the take over offer was well supported by major shareholders of XCD Energy with a number of entities controlling almost 18.5% of shares on issue and 6.8% of listed options on issue already entering into a pre-bid acceptance agreement with 88 Energy.
88 Energy’s MD, David Wall already holds 4.2 per cent of XCD Energy shares and 88 Energy’s Chairman, Michael Evens holds another 0.57 per cent of XCD.
88 Energy Managing Director, Dave Wall 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.”
88 Energy’s strategy is to create something of an oil exploration powerhouse in the lucrative North Slope of Alaska that will combine nearly 700,000 gross acres of gross land in the region across three projects , Project Icewine, the Yukon Leases and Project Peregrine.
88 Energy says the combining of the two company’s assets will create enhanced commercial and operational synergies that will make it easier to attract exploration funding.
XCD said it was currently considering the offer that was delivered to it on Friday afternoon.
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