The Directors of Beach Energy Ltd and Impress Energy Ltd are pleased to announce they have agreed, subject to shareholder approval, to merge the two companies through a Scheme of Arrangement.
The merger further consolidates Beach’s position as the largest Mid Cap player in the Cooper Basin and is in line with Beach’s stated growth strategy to double production and reserves in 2-5 years.
Under the Scheme to be approved by Impress shareholders at a general meeting of the Company, Beach will acquire all of the issued shares in Impress that it does not own at 8.25 cents per share cash, valuing Impress at approximately $73.1 million.
Beach intends to fund the transaction from existing cash reserves. As at 30 September 2010, Beach had $207.5 million in cash reserves. The offer represents a 35.9% premium to the 1 month Volume Weighted Average Price (“VWAP”) of Impress shares of 6.1 cents and a 47.3% premium to the 2 month VWAP of 5.6 cents.
The merger allows Impress shareholders to receive a significant premium for their shares. Subject to the Scheme being approved, Beach will assume the significant funding obligation required to develop Impress’s Cooper Basin assets and the risks associated with the development of the Company’s exploration portfolios.
For Beach, the transaction builds the Company’s already strong presence in the Cooper Basin, growing its portfolio of oil and gas exploration and production assets.
Beach also proposes to use the Impress merger as a springboard to accelerate development of Cooper Basin assets in conjunction with existing partners.
Securing additional acreage in key western flank permits is a strategic imperative for Beach and this merger is expected to have positive implications for reserves, production protection and growth over the coming years. Beach Managing Director Mr Reg Nelson said the acquisition of the Impress assets would provide a natural extension to the Company’s portfolio of western flank Cooper Basin assets, in line with its strategy of consolidation in the region.
“We are aiming to double our production and reserves over the next two to five years,” said Mr Nelson. “Merging with Impress, which holds permits adjacent to ours in the Cooper Basin, is a logical incremental step in achieving that through both exploration and development targets.”
Beach currently operates 19 oil fields in the Cooper-Eromanga with five gas discoveries awaiting development and owns an approximate 21% interest in the Cooper Basin project operated by Santos Limited, while Impress has three producing fields and four oil discoveries jointly operated by Victoria Petroleum.
Impress Chairman Mr Eddie Smith said the transaction represented an outstanding opportunity for shareholders to realise the underlying value of their investment in cash at a substantial premium to the historical trading price of Impress.
“As a Board, we believe this proposal represents very good value for our shareholders, particularly in light of the significant new Cooper Basin funding requirements that lie ahead for Impress as a standalone company,” said Mr Smith.
“We recommend that shareholders should vote in favour of the Scheme in the absence of a superior proposal and subject to receiving a favourable Independent Expert’s Report. “The Impress Directors have also stated their intention to vote in favour of the Scheme for all of the shares they control.”
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Source: Beach Energy, November 22, 2010