Join our daily newsletter At The Bell to receive exclusive market insights
- Strike Energy (STX) is moving to acquire Talon Energy (TPD)
- Both parties already partner in the Perth Basin at Walyering
- Talon has a stake in a Mongolian gas project and it wants to de-merge the company as a ‘Mongolian Spin-Out’
- Talon also recently struck a farm-in agreement with Triangle Energy and it’s unclear what Strike will do with that deal
- Strike last traded at 42.5 cents, while TPD last traded at 19.5 cents
Strike Energy (STX) is in the process of acquiring explorer Talon Energy (TPD) as part of its expansion efforts in the onshore WA Perth Basin energy province.
Talon Energy holds domestic onshore assets and a stake in TMK Energy’s (TMK) Mongolian Gurvantes XXXV coal seam gas project, situated 20 kilometres from the Chinese border.
Both companies are already collaborators in the Basin.
Talon also recently entered into a farm-in deal with Triangle Energy (TEG), and the outcome of that arrangement is uncertain following this acquisition.
Talon is now set to de-merge its Mongolian asset “to the benefit” of shareholders.
This move, known as the ‘Mongolian Spin-Out,’ will transfer these assets to a separate entity, allowing shareholders to maintain an interest in the Gurvantes XXXV project.
Talon’s board is fully supportive of this acquisition.
Strike enters binding scheme implementation deed with Talon
Strike and Talon have inked a binding scheme implementation deemed where Strike will acquire all issued shares in Talon under an arrangement. Talon shareholders are to receive 0.48 shares in Strike for every share of Talon held.
The implied offer price of 21.2 cents a share for Talon’s Perth Basin business is a 21 per cent premium to Talon’s closing share price on August 11, “excluding additional value that may be realised via the potential demerger of Talon’s Mongolian assets.”
Strike shareholders will own approximately 89 per cent of all issued Strike shares upon implementation of the scheme; Talon shareholders pick up the overhanging 11 per cent.
For its troubles, Strike will provide Talon with $6 million as a funding facility to fund Talon’s capital requirements across the process.
Potential to boost revenue
In short, Strike believes the acquisition will generate the means for the company to clock revenue of $82 million from the WA onshore Walyering gas field alone, which went live last year.
It also sees the ability to boost its bankability profile, as well as pick up an aggregate of 1022 petajoules of potential gas reserves.
“The combined group will have the capacity to generate initial annualised cash flows in excess of $82 million from the Walyering gas field alone,” Strike CEO Stuart Nicholls said.
“The additional free cash flow generation will support an acceleration of Strike’s Government-endorsed Perth Basin development strategy.”
Strike last traded at 42.5 cents, while TPD last traded at 19.5 cents.
