- Strike and Warrego have entered due diligence and negotiations under a mutual confidentiality agreement.
- Strike Energy announced it had submitted a confidential non-binding merger proposal to Warrego’s board.
On Thursday, Strike Energy announced it had submitted a confidential non-binding merger proposal to Warrego’s board. It made a takeover offer in 2020 and was rebuffed by Warrego Energy. Last year, it bought stock in the company, eventually holding over 8%.
The companies have a fraught history, offering vastly different initial resource estimates for their West Erregulla-2 well in 2020. Warrego’s third-party estimate by RISC was 512 billion cubic feet, while Strike’s in-house work suggested more than double. Later disagreements over the appraisal well West Erregulla-4 and a maiden reserves certification in October last year were well below both companies’ estimates. However, the re-entry of West Erregulla-3 this year has increased reserves and resources.
Strike Energy had made two earlier merger proposals which would have seen Warrego shareholders receive 0.714 new shares in Strike. However, according to Warrego’s board, this was deemed to undervalue the company. With a higher offer, Strike and Warrego have entered into due diligence and negotiations under a mutual confidentiality agreement. Following the closing of these new deals, Strike shareholders would own just under 72% of the combined company and Warrego shareholders would own around 28%.