DRILLSEARCH Energy will acquire Ambassador Oil & Gas in a friendly takeover after rival bidder Magnum Hunter Resources Corporation refused to increase its offer price.

Drillsearch made its first takeover offer for the company in May, but this was disrupted in June by Magnum Hunter, as the US shale company made an offer of one of its shares for every 27.8 Ambassador shares held.

Drillsearch later increased its offer – to one of its shares plus 5 cents for every 5.4 Ambassador shares held.

Magnum Hunter announced in mid-August that it would not increase its offer, saying it had based the initial bid on the opportunity to increase its exposure to the Cooper basin.

The company holds a 17 per cent stake in New Standard Energy, which is the operator of PEL 570 – of which Ambassador owns 47.5 per cent.

But after New Standard won approval to suspend work commitments over the block for six months, the acquisition of Ambassador had become less attractive, Magnum Hunter chief executive Gary C Evans said.

In advising it had accepted the Drillsearch offer, Ambassador directors said the offer had an implied value of 33.5 cents per Ambassador share, compared to Magnum Hunter’s 30.7 cents.

Drillsearch held an 84.2% stake in Ambassador as Oil & Gas Australia went to press.

The company’s nominated directors, Jim McKerlie and Brad Lingo, had been appointed to the Ambassador board, with David Shaw and Emmanuel Corriea to resign, while Tino Guglielmo would remain for a short period, the companies said.