Strike Energy has announced it will acquire Perth Basin joint venture partner Talon Energy, just weeks after withdrawing an unsolicited proposal for the company.
Strike Energy has announced it will acquire Perth Basin joint venture partner Talon Energy, just weeks after withdrawing an unsolicited proposal for the company.
Under the deal, John Poynton-chaired Strike will acquire all issued shares in Talon via a scheme of arrangement, with Talon shareholders to receive 0.4828 new Strike shares for each Talon share held.
Strike will also look to demerge Talon’s 33 per cent stake in its Mongolian gas asset Gurvantes, allowing Talon shareholders to retain an interest in the project along with $850,000 cash through a potential spinout into a separate vehicle.
The scheme is not conditional on the completion of a Mongolian demerger.
On a pro forma basis, the deal will leave Strike shareholders with 89 per cent of the company, with Talon shareholders owning approximately 11 per cent of shares on issue.
It values Talon’s Perth Basin business, where the companies are currently JV partners in the Walyering gas field, at 21.2c per share – a 21 per cent premium to Talon’s closing share price on Friday.
Talon holds a 45 per cent stake at Walyering.
The Talon board unanimously recommended its shareholders vote in favour of the deal.
Strike said the acquisition would generate material corporate and operational synergies, with the capacity to generate initial annualised revenue of more than $82 million from Walyering alone.
The combined entity will have an aggregate 1022 petajoules of independently certified Perth Basin conventional gas 2P reserves and 2C resources.
Strike managing director and chief executive Stuart Nicholls said the deal was a significant moment in its development strategy within the red-hot Perth Basin.
“This is an earning accretive transaction for Strike that will simplify Strike’s operations and provide a platform to remove the costs in operating and managing its existing joint venture with Talon,” he said.
Strike will make a $6 million convertible funding facility available to fund Talon’s capital requirements.
Talon managing director and chief executive Colby Hauser said the company was pleased with the outcome.
“Upon successful implementation of the scheme Talon shareholders will benefit from receiving an attractive premium for their shares and may also realise additional value from continued exposure to the Gurvantes development in Mongolia, should the Mongolia demerger complete,” he said.
“Talon shareholders will benefit from becoming shareholders in the combined Strike Energy, which is expected to have a strong cashflow profile with a number of medium-term growth and development options.”
Strike has made two previous attempts to come to agreement on acquisition terms.
The Walyering project has state government backing, as one of four projects being accelerated to commercial production by 2025 under Strike’s gas acceleration strategy.
In May Strike struck a deal to supply Santos with condensate from Walyering, following up an earlier deal between the parties.
Strike has been a significant player in the Perth Basin, having unsuccessfully bid against Hancock Prospecting in a battle for Warrego Energy earlier this year.
Talon shares rose more than 12 per cent this morning, with Strike down more than 3 per cent.
