ASX-listed juniors Strike Energy Limited and UIL Energy Limited have entered into a binding Takeover Implementation Deed (TID) pursuant to which Strike Energy (or its wholly owned subsidiary) will make a conditional off-market takeover offer to acquire all of the issued shares of UIL Energy.
The two companies believe the combination will create a compelling opportunity to build a material domestic gas business in the Perth Basin, to complement Strike Energy’s extensive holding in the Cooper Basin.
The combination of the two portfolios creates a robust platform to further explore, appraise and ultimately develop the Perth Basin assets. The addition of UIL Energy’s northern permits (EPA-82, EPA-98 and EPA -99), which Strike Energy management believe to be an extension of the Kingia-High Cliff sands sequence, provide additional upside to Strike Energy’s West Erregulla prospect in EP-469 due to be drilled in Q1 2019.
The Board of Directors of UIL Energy have unanimously recommended that UIL Energy shareholders accept the Offer:
- in the absence of a superior proposal; and
- subject to satisfaction of the capital raising condition and an independent expert concluding that the Offer is reasonable.
Strike Energy chairman, John Poynton, said it is an exciting time for Strike Energy to be building a meaningful Perth Basin operated business.
“The additional exploration potential in the extensions of the Kingia-High Cliff sands sequence is set to be high graded through our near term high- impact drilling at West Erregulla, and has the potential to release further large scale gas opportunities,” Mr Poynton said.
“The Perth Basin continues to show signs of a heavily underexplored hydrocarbon system and the addition of UIL Energy’s acreage will result in Strike being set to influence the Western Australian domestic gas market over the coming decades.
“This transaction plays to Strike’s strengths of being a low cost and high-impact on-shore exploration and appraisal operator, which makes it an extremely attractive opportunity for both UIL Energy and Strike Energy shareholders alike.
“The Merged Group will be well capitalised to execute on the Perth Basin strategy whilst continuing to progress the Southern Cooper Basin Gas Project, which is approaching a key milestone in proving commercial success. The addition of the UIL Energy portfolio provides further diversity and scale benefits, and is a natural fit with our strategy of targeting potentially transformational gas supplies for both the Western and Eastern Australian domestic gas markets.
UIL Energy chairman Simon Hickey said this is a compelling offer for UIL Energy shareholders to participate in a combination of Strike Energy and UIL Energy with significant positions in both the Perth Basin and Cooper Basin, and the potential to supply gas to both the West Coast and East Coast markets.
“Both Strike Energy’s interest in the West Erregulla block and our portfolio enhances the likelihood of a merged entity becoming a substantial operator in the Perth Basin. The West Erregulla prospect, expected to be drilled in early 2019, along with Strike Energy’s current Jaw’s project, provides UIL Energy shareholders with exposure to highly prospective and significant projects,” Mr Hickey said.
“In the absence of a superior proposal and subject to the independent expert concluding the Offers are reasonable, I, along with the UIL Energy Board of Directors, recommend all UIL Energy shareholders accept the Offer from Strike Energy, as I intend to do in relation to my own shares.”