PERTH (miningweekly.com) – Oil and gas explorer Strike Energy has inked a takeover implementation deed with fellow-listed UIL Energy, offering that company’s shareholders 0.485 Strike shares for every UIL share held.

The UIL board has unanimously recommended that shareholders accept the offer in the absence of a superior proposal, and subject to the satisfaction of capital raising conditions.

UIL told shareholders on Monday that the combination of the two companies presented a “compelling opportunity to build a material domestic gas business, with significant holdings in the Cooper and Perth basins”.

Strike said that the addition of UIL’s northern permits would provide additional upside to the company’s own West Erregulla prospect, which was due for drilling in the first quarter of 2019, while UIL’s portfolio would also diversify Strike’s portfolio across multiple plays in the Perth basin.

The merged group would have a holding in the basin covering some 3 000 km².

“The transaction plays to Strike’s strengths of being a low-cost and high-impact onshore exploration and appraisal operator, which makes it an extremely attractive opportunity for both UIL and Strike shareholders alike,” said Strike chairperson John Poynton.

“The merged group will be well capitalised to execute on the Perth basin strategy while continuing to progress the Southern Cooper basin gas project, which is approaching a key milestone in proving commercial success.”

The offer price represented a premium of 43.4% based on UIL’s 30-day volume-weighted average share price, and a 26.1% premium to the company’s five-day volume-weighted average share price.

The offer is subject to a 50.1% minimum acceptance condition, as well as Strike completing a A$13-million capital raise.

The UIL board, which collectively holds a near 25% interest in the company, have expressed their intent to accept the offer in the absence of a superior proposal, and subject to the satisfaction of conditions.