Drillsearch Energy Ltd (ASX:DLS) and Innamincka Petroleum Ltd (ASX:INP) have agreed to a friendly merger, that would see the combined entity with a market cap in excess of $150 million.
Drillsearch says the merger by way of scheme of arrangement would create the Cooper Basin’s leading mid-tier oil and gas company, with combined production, development and exploration permits and projects.
Subject to court and Innamincka shareholder approval, Innamincka shareholders would receive 2.5 Drillsearch shares for every Innamincka share.
The scheme has implied value of 16 cents per Innamincka share, a premium of 80 per cent over its last traded price.
Innamincka’s Directors have recommended shareholders vote in favour of the scheme, chairman Adam Johnson saying the merger makes compelling strategic sense.
Drillsearch’s chairman Jim McKerlie says the merger will drive the development of its assets by the creation of a stronger technical and commercial group.
Drillsearch Energy reported a net loss of $24.75 million for fiscal 2010.