Ambassador Receives Second Takeover Bid
The future of Ambassador Oil and Gas Ltd. has taken another turn following a second takeover proposal for the junior Australian explorer in less than a month – this time by U.S. company Magnum Hunter Resources Corp.
Magnum Hunter, a Houston-based shale company listed on the New York Stock Exchange, announced Tuesday its intention to make a $44.9 million (AUD $48 million) scrip bid for the Australian Securities Exchange listed Ambassador, which is exploring in the shale-rich Cooper Basin of Australia.
The proposed deal aims to outbid a “friendly” $37.4 million (AUD $40 million) offer made for Ambassador by another Cooper Basin focused company, Drillsearch Energy Ltd., May 28.
Magnum Hunter is a major shareholder of New Standard Energy Ltd., Ambassador’s joint venture partner in the highly prospective petroleum exploration license (PEL) 570 block in the Cooper Basin.
New Standard cemented a 52.5 percent working interest in PEL 570 earlier this year when it completed a farm-in agreement with Ambassador worth $38.8 million (AUD $42.5 million).
Magnum Hunter intends to offer one of its shares for every 27.8 Ambassador shares, which values the Australian company’s shares at $0.32 (AUD $0.34) each.
In contrast, Drillsearch has offered one of its shares for every 5.4 Ambassador shares, which values the company at $0.27 (AUD $0.29) per share. Drillsearch, which already holds 19.9 percent of its target, must receive 50.1 percent support from Ambassador’s shareholders for the offer to be successful.
Magnum Hunter Chairman and Chief Executive Gary Evans said the company had recently decided to increase its exposure to a very specific region of Australia where a presence had already been established.
“Our decision was made based upon a combination of factors, which include the following: geological interpretation, substantial land position, existing infrastructure, gas price and immediate exposure to international takeaway markets, and, most importantly, significant upside potential for our shareholders,” Evans said in statement.
“We believe that the knowledge we have gained over the past five years in successfully exploring the Eagle Ford, Bakken, Marcellus and Utica shale plays is transferable to the Cooper Basin of Australia.”
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