Two small Perth-based Alaskan explorers, 88 Energy Ltd. and XCD Energy Ltd., have agreed to merge.
The agreement comes following a recent unsolicited takeover bid by 88 Energy on XCD which offered 1.67 new 88 Energy shares for every XCD Energy share and 0.5 of 88 Energy shares for each XCD option.
88 Energy revised its bid and now directors of both companies have unanimously recommended an off-market takeover offer whereby 88 Energy will issue 2.4 shares for every XCD share held along with 0.7 of 88 Energy’s shares for every XCD listed option.
The offer is subject to a formal bidder’s statement, the absence of a superior offer, an independent expert’s report judging the offer fair and reasonable and at least a 90% acceptance level from XCD shareholders and listed option holders.
If successful, XCD Energy will become a wholly-owned subsidiary of 88Energy with XCD shareholders owning 20% interest of the new entity.
88 Energy’s managing director, David Wall, already holds 4.2% of XCD shares, while the 88 Energy non-executive chairman, Michael Evans, holds 0.57% of XCD.
Both companies said the merged entity will have a diversified portfolio of exploration projects on the Alaskan North Slope. XCD holds 195,373 acres of land on the North Slope while 88 Energy’s leases total 250,000 acres.
The three main prospects will be the Project Icewine, leases in the Yukon, and Project Peregrine.
Project Icewine, from 88 Energy’s portfolio, includes the recently drilled Charlie-1 exploration well while XCD’s Project Peregrine permits lies 15 km from ConocoPhillips’ Harpoon discovery. Harpoon is also on trend and analogous to XCD’s Harrier prospect.