The prior unsolicited takeover bid had achieved backing of about 18.5% of XCD’s shareholders, and the recommended merger comes with improved terms.
In the all-paper deal, 88 Energy will issue 2.4 new 88 Energy shares and 0.7 for every listed share option held - up from 1.67 per share and 0.5 per option.
XCD’s board now recommend that its shareholders accept the offer, in the absence of any superior proposals. They will hold around 20% of the enlarged company as a result of the transaction.
88 Energy said the combination creates an explorer with a diversified portfolio on Alaska’s North Slope, with three distinct key areas: Project Icewine, Project Peregrine, and the Yukon licences.
It will have improved scale, market presence and funding capability, and share liquidity, according to AIM and ASX listed 88 Energy.
The new company will leverage 88 Energy’s geological and operational expertise, specific to the North Slope of Alaska - where it has drilled four wells and acquired several 2D and 3D seismic data.
“This includes extensive technical knowledge of the regionally successful Brookian oil plays, in which 88 Energy retains significant upside exposure via its highly prospective portfolio of exploration/appraisal projects covering ~330,000 net acres (480,000 gross) co-located on the North Slope,” Dave Wall, 88 Energy managing director said in a statement.
“88 Energy’s Board is confident that merging the assets of 88 Energy and XCD Energy, combined with the potential upside offered, places the combined group in a strong position to fill the growing investment void in the ASX / AIM-listed oil and gas sector.”
XCD chair Peter Strickland added: “In addition to a significant premium, the transaction provides XCD Energy shareholders with the opportunity to become shareholders of a company with significantly increased scale and demonstrated operational capability that is focussed on the world-class oil potential of the North Slope of Alaska.
“It allows our shareholders to continue to have a material interest in the upside associated with the Brookian oil plays, while mitigating and diversifying the subsurface and execution exploration risks.”