88 Energy launches takeover bid for XCD Energy

88 Energy announced its intention to make an off-market takeover offer to acquire all of the fully-paid ordinary shares and listed options on issue in XCD Energy, an ASX-listed oil exploration company with operations on the North Slope of Alaska, on Monday.

The AIM-traded firm said its offer consisted of 1.67 new 88 Energy shares for every XCD Energy share held, and 0.5 new 88 Energy shares for every XCD Energy listed option held.

It said the share offer valued the XCD Energy shares at one cent each, representing a 100% premium to the closing price of XCD shares on the ASX on 24 April, of 0.5 cents, and a 120% premium to the 10-day volume-weighted average price of XCD shares.

The offer was also a value equal to XCD Energy's placement in October, which was undertaken at one cent per share.

It said the option offer, meanwhile, valued the XCD Energy listed options at 0.3 cents each, representing an 85% premium to the volume-weighted average price of all trades completed on the ASX since the options were listed on 25 February.

The merger would create an Alaska-focussed oil explorer with a diversified portfolio of three key project areas, being Project Icewine, the Yukon leases and Project Peregrine, all at various stages of project maturity.

88 Energy said it would also create a board, management and technical team with “proven operational capability” and a track record for delivering on project objectives, together with access to an extensive network of global and Alaskan relationships, both in a business and technical sense.

The merger would also bring increased scale, market presence, funding capability and share trading liquidity across both the ASX and AIM markets.

XCD securityholders would hold up to 15% of the combined group, thus retaining exposure to the potential future upside of the Brookian oil plays across both sets of assets, the board said.

It also spoke of mitigating and diversifying its exploration risk, while gaining exposure to 88 Energy's assets, balance sheet and farm-out expertise, and benefiting from the combined group's strong exploration and operating expertise, enhanced financial strength and the ability to optimise exploration activity across an enlarged portfolio.

“Major XCD Energy shareholders have entered into pre-bid acceptance agreements with 88 Energy in respect of 18.5% of shares on issue and 6.8% of listed options on issue,” the board said in its statement.

At 1106 BST, shares in 88 Energy were up 0.41% at 0.25p in London.