PERTH (miningweekly.com) – ASX-listed Real Energy has struck a merger agreement with joint venture (JV) partner Strata-X Energy to create a new entity called Pure Energy Corporation with gas resources in the Surat and Cooper basins, in Queensland, and in the Republic of Botswana.

Under the terms of the merger agreement, Real Energy shareholders would receive one new Strata-X share for three of their Real Energy shares.

Real Energy told shareholders on Wednesday that the combination of the two companies represented a compelling opportunity to create a material gas business with significant holdings in Queensland, including full ownership of the JV Project Venus, as well as a broader asset portfolio in Australia and Botswana, which will present further upside.

The ASX- and TSX-V-listed Strata-X noted that the merger would also remove duplicate administrative functions and listing costs, and would deliver significant cost savings to the merged entity.

Following the merger, Strata-X would change its name to Pure Energy and would delist from the TSX Venture Exchange.

The merged entity will have a total of 11.89 tcf of prospective gas resources, with 770 bcf of 3C and 353 bcf  of 2C contingent gas resources. Pure Energy was targeting lower emissions, initially through substitution of methane for coal and diesel, but the entity will also be investigating the feasibility of building a methane-to-hydrogen plant in Gladstone.

“This is a compelling combination taking the best elements of both companies and having a strong portfolio of projects with positions in both the Surat basin and Cooper basin, and having a significant project in Botswana together with the potential to supply gas to East Coast markets,” said Real Energy MD Scott Brown.

“Real Energy and Strata-X Energy’s combined interest of 100% in the Project Venus and our broader portfolios enhances the likelihood of the merged entity becoming a meaningful gas operator in the east coast of Australia.”

Strata-X chairperson Ron Prefontaine said that the transaction played into the company’s strength of being a low cost and high impact onshore exploration and appraisal operator, which made it an extremely attractive opportunity for both Real Energy and Strata-X shareholders.

“It is an exciting time to be building a new company, Pure Energy, which will have a meaningful Queensland-focused gas operated business and a great position in the Botswana coal seam gas fairway, together with the exciting hydrogen initiatives.”

The merger is subject to a number of conditions, including court and shareholder approvals.