Australian duo 88 Energy and XCD Energy plan to merge to create an Alaska-focused exploration company.

The pair have entered a bid implementation agreement which will see 88 Energy offer 2.4 new 88 Energy shares for every XCD share and 0.7 new shares for every XCD listed option.

The share offer values XCD’s shares at A$0.012 (US$0.008) each, representing a 71% premium to the closing price of XCD’s shares on Wednesday, a 55% premium to the 60-day volume weighted average price and a whopping 143% premium to the 30-day volume weighted average price.

The option offer values XCD’s listed options at A$0.0035 each, representing a 116% premium to the volume weighted average price of all trades completed on the ASX since the options were listed on 25 February 2020.

The newly merged entity would hold three prospective project areas on Alaska’s North Slope - Project Icewine, the Yukon Leases and Project Peregrine.

“In a combined company, XCD Energy shareholders and listed option holders will be able to leverage from 88 Energy’s geological and operational expertise, specific to the North Slope of Alaska, where we have drilled four wells as operator, safely and within budget, and acquired several 2D and 3D seismic surveys over the last five years,” 88 Energy managing director David Wall said.

“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.”

XCD’s board has unanimously recommended securityholders accept the deal, subject to the independent expert and in the absence of a superior proposal.

The deal is also subject to a number of conditions, including a 90% minimum acceptance condition.

Finance

Aussie duo to merge to form Alaska-focused explorer