Rick Wilkinson
OGJ Correspondent
Beach Energy Ltd., Adelaide, and Drillsearch Energy Ltd. of Sydney have announced a merger that would create a company that would be Australia's largest onshore oil producer.
Based on the proposed merger announcement, Drillsearch shareholders will receive 1.25 shares of Beach for every share of Drillsearch held. Beach already has a 4.5% interest in Drillsearch and the deal is judged likely to resist any outside bid. Beach says it has no other competing proposals.
Both companies have Seven Group Holdings of Perth as a common substantial shareholder with 19% of each.
Drillsearch Chairman Jim McKerlie said any competing bid would be evaluated, but the current desire is to progress with the Beach merger to build a significant company.
The key assets of the combined entity will be the producing Western Flank oil fairway in South Australia's Cooper basin, including Bauer oil field and the producing Western Wet Gas joint venture.
The companies have a substantial footprint in the Cooper-Eromanga basins of South Australia and Queensland and the merger will create a $1.2-billion (Aus.) company even at $50/bbl, according to Jim McKerlie.
Both companies have been low-cost operators and the marriage is seen as a vehicle for improved liquidity, possibly a market rerating, and the ability to be more profitable than the separate companies on their own.
