Providing coverage of Alaska and northern Canada's oil and gas industry
May 2020

Vol. 25, No.18 Week of May 03, 2020

North Slope explorer 88 Energy set to buy NPR-A lessee XCD

Kay Cashman

Petroleum News

Alaska-focused oil explorers 88 Energy and XCD Energy are looking at merging their North Slope assets.

According to April 27 press releases from both publicly traded Australia-based companies, XCD received a non-binding takeover offer late Friday April 24 to acquire all of the fully paid ordinary shares and listed options on issue in XCD Energy, with discussions between the two ASX-listed firms continuing through the weekend.

The unsolicited non-cash offer for 100% of XCD’s shares involved each XCD shareholder receiving 1.67 88 Energy shares for every 1 XCD share and 0.5 of an 88 Energy share for every 1 XCD quoted option held.

88 Energy said April 27 that it had several XCD shareholders committed to the terms of the takeover; specifically, they’d “entered into pre-bid acceptance agreements with 88 Energy in respect of 18.5% of shares on issue and 6.8% of listed options on issue.”

Veteran Alaska investor Paul Craig who is an XCD shareholder told Petroleum News April 28 that “a legitimate offer to acquire the company warrants careful scrutiny. Both companies have excellent management. If there is merit to consolidating the assets of the two companies, and if the structure of the deal is in the interest of shareholders, then the acquisition would make good sense for all concerned.”

88 Energy’s managing director is David Wall; XCD’s managing director is Dougal Ferguson.

XCD holds Nanushuk prospect

XCD holds 100% of the North Slope Peregrine project, a shallow onshore Nanushuk play within an area of 195,373 acres made up of 17 leases within the National Petroleum Reserve-Alaska.

88 Energy’s key North Slope leased areas are in Project Icewine in the central North Slope south of Prudhoe Bay, as well as its Yukon leases on the eastern North Slope, which include BP’s 1993 Yukon Gold oil discovery well. In total, 88 Energy subsidiaries hold approximately 480,000 North Slope acres (250,000 net acres).

The XCD leases are about 22 miles south of ConocoPhillips’ Willow discovery, which XCD said is estimated to contain up to 800 million barrels of oil equivalent.

ConocoPhillips “is drilling four appraisal wells at Willow and up to three exploration wells at its Harpoon prospect, located about 15 km (9 miles) northwest of XCD’s Harrier prospect. The Willow oil field is considered a direct analogy to XCD’s Merlin prospect while Harpoon is interpreted to lie on the same sequence boundaries as the Harrier prospect,” Ferguson told Petroleum News Jan. 21.

According to Ferguson, “this is based on the 2D USGS data that we reprocessed where we have lines over both Willow and Harpoon. We …. assume they (ConocoPhillips) must be confident in what they see on the 3D.”

XCD has said its acreage has a mean unrisked recoverable prospective resource of 1.6 billion barrels of oil.

Unfortunately, only one of the three Harpoon wells and two of the four Tinmiaq wells in the Willow area were drilled by ConocoPhillips this past winter due to its shutting down the winter off-road drilling season early to due COVId-19 concerns.

Offer subject to conditions

XCD said the offer from 88 Energy is subject to 90% minimum acceptance from its shareholders, as well as other conditions such as “no material adverse changes, absence of third party rights on a change of control … no material acquisitions or disposals and no prescribed occurrences.”

One of the major shareholders in XCD is Wall, who was quoted in 88 Energy’s press release as saying: “In a combined company, XCD Energy shareholders and listed option holders will be able to leverage from 88 Energy’s geological and operational expertise, specific to the North Slope of Alaska, where we have drilled four wells as operator and acquired several 2D and 3D seismic surveys over the last five years. This includes extensive technical knowledge of the regionally successful Brookian oil plays, in which 88 Energy retains significant upside exposure via its highly prospective portfolio of exploration/appraisal projects.”


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