Strike Energy has edged closer towards acquiring Perth Basin-focused oil and gas company UIL Energy with an independent expert concluding that its $16.1m all-scrip takeover offer is fair and reasonable.
Importantly, UIL’s board has now recommended in favour of the transaction with all directors stating they will personally accept the offer.
UIL director’s collectively hold about 25% of UIL’s shares, which will take total acceptances of Strike’s offer to more than 30%.
After raising $13m last month, Strike is now cashed up to explore what riches UIL’s Perth basin may be hiding and the company is also on the brink of potentially achieving commercial gas flows from its historic Jaws-1 deep coal seam gas well in South Australia.
In October, Strike offered 0.485 Strike shares for every 1 UIL share in a bid to increase its exposure to the Perth Basin in Western Australia by more than 3000 square kilometres.
This includes an extension of the Kingia-High Cliff sands that is the main target at the West Erregulla prospect that Strike plans to drill in the first quarter of 2019.
West Erregulla is adjacent to the Waitsia development, which is regarded as the largest onshore conventional gas discovery in the last 40 years.
It is surrounded by abundant gas infrastructure which includes the major gas transmission pipelines of Western Australia.
Separately, Strike said that its Jaws-1 well in South Australia’s Cooper Basin has now moved to continuous gas flow of between 25,000 and 50,000 cubic feet of gas per day with regular bursts of up to 100,000 cubic feet per day.
With gas flows continuing to build at Jaws-1, Strike is potentially on the verge of proving that coal seam gas can be accessed commercially from over 2km deep – and the prize is extreme too, with an expected 11TCF of gas swirling around in the wider region for Strike.
Jaws-1 experienced a brief period of downtime in late October after an earthing fault caused a loss of power.
However, the company was able to recommence production and catch up to the bottom hole pressure recorded prior to the outage with the reservoir response continuing as expected.
The deep, horizontal Jaws-1 well at Strike’s 66.67%-owned Southern Cooper Basin Gas Project is designed to develop gas flows from what would be Australia’s deepest commercial coal seam gas deposit.
Once gas flow is established, the company will be able to book a reserve, which will set the stage for moving the project into development.
Strike Managing Director Stuart Nicholls said: “Strike Energy now looks forward to the UIL Energy Directors accepting the offer … as Strike Energy moves towards the bid becoming unconditional.”
By Matt Birney
