After identifying four new leads with Permian-age reservoir potential in two 100%-owned onshore North Perth basin permits last week, Strike Energy (ASX: STX) has confirmed it has submitted a confidential, non-binding indicative merger proposal to the board of Warrego Energy (ASX: WGO).
Under the proposed scheme of arrangement – which would see Warrego own approximately 30.5% of the combined group - Warrego shareholders would receive 0.775 new Strike shares for each Warrego share held.
Today’s scheme of arrangement replaces an original merger proposal, dated 16 September, under which Warrego shareholders stood to receive 0.7142 new Strike shares for each Warrego share held.
Warrego shareholders could also receive the full value of Warrego’s Spanish assets via the distribution of the net proceeds resulting from the sale of the assets.
While Warrego is focused on the development of its onshore assets in WA’s prolific Perth Basin, the company’s Spanish assets include an 85% working interest in the Tesorillo gas project in the Cadiz region and a 50.1% working interest in the El Romeral gas to power facility in the Seville region.
Prior to the value realised for Warrego’s Spanish assets to be distributed to Warrego shareholders, the Agreed Merger Ratio (AMR) implies a transaction price of $0.186 per share (based on Strike’s 30-day VWAP at 27 October 2022).
This represents a 40.6% premium to Warrego’s undisturbed price at 27 October 2022.
Strike's management believes a merger with Warrego at the AMR represents an “extremely attractive opportunity to deliver compelling value accretion to both Strike and Warrego shareholders”.
Strike believes a combined entity would also possess a world class development portfolio in the low-risk jurisdiction of the Perth Basin in WA consisting of gas, hydrogen, renewable energy, carbon capture developments.
“A merger between Strike and Warrego would create the leading ASX-listed Net Zero 20304 Perth Basin integrated energy, fertiliser and renewables company,” management noted.
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