3d Oil Rejects Hostile Bid
Sydney Morning Herald
Saturday January 17, 2009
THE junior explorer Drillsearch Energy has launched a hostile takeover for a fellow minnow, 3D Oil, in another episode of consolidation in the small-cap energy sector.
Drillsearch, which has a range of Australian exploration and producing assets, yesterday offered 3D shareholders four Drillsearch shares for each 3D share, valuing 3D at $11.3 million.Based on Thursday's closing prices, the deal offered a premium of just 0.3c a share, or 3 per cent, and the 3D board said it intended to reject the offer.3D's main asset is the West Seahorse field in Bass Strait, which could contain up to 7.8 million barrels of oil but is marginal at current oil prices.Drillsearch's market capitalisation is about $47 million, while the target's pre-bid market capitalisation of $11 million was less than the $12 million it has in cash.The deal has a minimum acceptance level of 50 per cent but the predator looks unlikely to win over the 18 per cent shareholder and managing director of 3D, Noel Newell. "As the major shareholder in 3D Oil, my present intention is to not accept the offer," he said. The news comes after Drillsearch took a conditional 19.9 per cent stake in 3D on Monday and said it intended to hold talks with 3D over a possible takeover or merger.Mr Newell said he had not discussed any deal with Drillsearch and it was possible the bidder was looking to secure 3D's cash balance. At the end of the September quarter, Drillsearch had $13 million in cash on hand.Drillsearch shares fell 0.2c to 2.6c and 3D rose 0.4c to 9.7c.
© 2009 Sydney Morning Herald