US shale company Magnum Hunter has flagged it will make a $48 million scrip bid for Cooper Basin shale gas play Ambassador Oil and Gas.
Magnum Hunter, which is a major shareholder of New Standard Energy, Ambassador’s joint venture partner in the PEL 570 block in the Cooper Basin, plans to offer one of its shares for every 27.8 Ambassador shares.
The potential deal is priced to trump an agreed takeover by Drillsearch Energy, Ambassador’s neighbour in the onshore South Australian oil and gas fields.
The bid, set to be announced today, is understood to value Ambassador shares at 34c, up from the implied value of 29c in Drillsearch’s May 28 bid.
That bid which was priced at about a 50 per cent premium to where the stock was trading before.
“Magnum Hunter will seek to engage with the board of Ambassador to obtain its support for and recommendation of the Magnum Hunter offer given the compelling value offered to Ambassador shareholders,” the Houston-based company said.
Ambassador shares closed yesterday at 27.5c.
DLS Price at posting:
$1.55 Sentiment: Buy Disclosure: Not Held
AQO Price at posting:
27.5¢ Sentiment: Buy Disclosure: Held