Warrego dismisses takeover offer from JV partner Strike Energy

Warrego Energy Ltd., Sydney, has dismissed a takeover offer from Strike Energy Ltd., Adelaide, its joint venture partner in 2019’s multiple-zoned West Erregulla gas discoveries in the onshore North Perth basin of Western Australia.

Warrego said it had received an unsolicited proposal from Strike to acquire all shares in Warrego for an all-scrip consideration. The offer was 1.2 Strike shares for each Warrego share.

Conditions of the offer included completion of due diligence on Warrego to Strike’s satisfaction; no material asset sales, divestments or similar transactions; no issuance of new equity or changes to Warrego’s capital structure; and receipt of a unanimous recommendation by the Warrego board.

Warrego directors said that the offer fundamentally undervalues the company and its assets. They said that, if implemented, the proposal would result in Warrego shareholders owning about 31% of the merged entity, whereas Strike and Warrego at the moment each hold 50% interest in onshore Perth basin permit EP 469 that holds the West Erregulla gas discovery.

In a separate announcement Warrego said that it was continuing with plans to close its Sydney office and move to a new smaller, low-cost office in Perth.

The West Erregulla-2 discovery was made in August 2019 and successfully flow tested during the following weeks across three reservoirs – the Kingia Sandstone, High Cliff Formation, and Wagina Formation. Strong gas flows and good reservoir quality were found in each zone.

West Erregulla-2 reached a total depth of 5,100 m making it the deepest onshore well drilled in Australia and one that has discovered the deepest ever hydrocarbons.