Strike in $16m Perth Basin bid

Strike Energy will extend its position in the Perth Basin, announcing it will acquire UIL Energy in a deal valued at around $16 million.

UIL shareholders will be offered 0.485 Strike shares for each UIL share, estimated to be a premium of 43.4 per cent compared to the 30-day volume-weighted average price of UIL stock.

The board of Brisbane-based UIL recommended the takeover.

UIL holds seven exploration permits in the Perth Basin, three west of the existing Beharra Springs field and four north of Dandaragan.

That will add to Strike’s existing exposure in the basin, including a share of the West Erregulla prospect, and various permits in South Australia’s Cooper Basin.

Adelaide-based Strike is led by managing director Stuart Nicholls, while John Poynton serves as chairman.

The first step for Strike will be completion of a $13 million capital raising, with Azure Capital to act as financial adviser, and Allen & Overy legal adviser.

Further details on the raising are yet to be announced.

Mr Poynton said Strike would build a meaningful business in the basin.

“The additional exploration potential in the extensions of the Kingia-High Cliff sands sequence is set to be high graded through our near term high-impact drilling at West Erregulla, and has the potential to release further large scale gas opportunities,” he said.

“The Perth Basin continues to show signs of a heavily underexplored hydrocarbon system and the addition of UIL Energy’s acreage will result in Strike being set to influence the Western Australian domestic gas market over the coming decades.

“This 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 Energy and Strike Energy shareholders alike.

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

UIL chair Simon Hickey said the new entity would have potential to supply gas in both the west coast and east coast markets.

“Both Strike Energy’s interest in the West Erregulla prospect and our portfolio enhances the likelihood of a merged entity becoming a substantial operator in the Perth Basin," he said.

“The West Erregulla prospect, expected to be drilled in early 2019, along with Strike Energy’s current Jaw’s project (in South Australia), provides UIL Energy shareholders with exposure to highly prospective and significant projects.”

Shares in UIL dropped 7.7 per cent to be 6 cents each at the time of writing, while Strike was in a trading halt at 14.5 cents.