Drillsearch has taken a controlling stake in energy junior Ambassador Oil and Gas after topping up its share swap offer with cash.
Drillsearch moved to combat a rival offer from Magnum Hunter Resources in the US by adding five cents per share to its bid of one Drillsearch share for every 5.4 Ambassador shares.
Ambassador said the bid was superior to Magnum Hunter’s, due to various conditions placed on the US proposal, and recommended it in the absence of a superior deal.
But Ambassador chief executive Guistino Guglielmo told AAP the process was not over, and Magnum may well increase its offer.
Drillsearch’s bid is valued at $48 million, a similar value to Magnum Hunter’s bid, depending on share prices.
Ambassador later revealed that nearly 33 per cent of its shareholders had accepted Drillsearch’s new offer.
That included Ambassador chairman David Shaw and chief executive Guistino Guglielmo, who together hold a 6.34 per cent stake.
Drillsearch already owned 19.9 per cent of Ambassador.
Ambassador’s exploration assets are in South Australia’s Cooper and Eramonga onshore oil and gas basins, alongside the larger Drillsearch’s assets in the same region.
Drillsearch chairman Jim McKerlie said the offer would allow shareholders to own shares in an Australian entity rather than New York-listed Magnum.
“Drillsearch, through its sole focus on the Cooper Basin, provides Ambassador’s shareholders with a broader exposure to this major Australian region, whereas Magnum Hunter is focused primarily on US shale gas,” he said.
Market analysts predict a ramp-up in takeover activity in the energy space due to gas demand, with Origin Energy agreeing earlier in June to pay up to $US800 million ($A865.57 million) for Karoon Gas’s interest in the Poseidon discovery in WA’s Browse Basin.
Ambassador shares gained half a cent to 33 cents, and Drillsearch shares fell 4.5 cents, or 2.9 per cent, to $1.51.