Corporate M&A

Strata-X to Merge with Real Energy

By Shivangi Jain
July 16, 2020
2 minutes read
Kings Canyon Northern Territory Australia

Strata-X Energy Ltd. has entered into a binding Scheme Implementation Agreement (SIA) to merge with ASX-listed Real Energy Corporation Ltd. in an all-stock transaction valued at approximately A$5.85 million, including working capital adjustments. The transaction will result in a nil premium merger, and the combined entity will be renamed Pure Energy Corporation Ltd.

Strata-X is an independent CBM-focused E&P company, and is dual-listed on ASX and TSX-V. The company’s operations are currently focused on the Serowe project in Botswana and Project Venus located within the Walloon CSG fairway in Australia.

Real Energy is focused on the exploration and development of onshore petroleum assets in the Cooper and Surat basins in Queensland, and currently holds a 100% interest in two large permits – ATP 927P (Windorah Gas Project) and ATP 1194PA (East Flank Oil Project), as well as a 50:50 JV with Strata-X to develop ATP 2051 (Project Venus) in the Surat basin.

Under the terms of the SIA, shareholders will receive one new Strata-X share for three Real Energy shares held. Based on approximately 353.2 million Real Energy shares outstanding, the equity value amounts to approximately A$7.08 million based on the A$0.06 closing price of Strata-X shares on July 14th. According to regulatory filings, Real Energy had no debt and a working capital surplus of A$1.21 million at the end of 2019.

Upon completion of the merger, Pure Energy will hold a portfolio of gas-focused projects in the Surat and Cooper basins, and the Republic of Botswana, with associated estimated prospective resources of 11.8 trillion cubic feet (Tcf) and 2C contingent resources of 353 billion cubic feet (Bcf).

“This is a compelling combination taking the best elements of both companies and having a strong portfolio of projects with positions in both the Surat basin and Cooper basin, and having a significant project in Botswana together with the potential to supply gas East Coast markets, ” said Real Energy’s Managing Director, Scott Brown, who is also the nominated Managing Director for Pure Energy.

“Pure Energy will have exposure to highly prospective and significant projects including Project Venus in the Surat basin, the Windorah Gas Project in the Cooper basin, and the Serowe Gas Project in Botswana,” he added.

The transaction is subject to customary closing conditions, including a majority approval of the scheme by Real Energy shareholders, court sanction of the scheme, and Strata-X delisting its shares from the TSX-V.

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