London-listed 88 Energy (AIM:88E) unveiled to investors this morning that it has reached an agreement with XCD Energy (LON:XCD) for a unanimously recommended takeover.

The merger, which will see both parties create an Alaska-focused oil company, will see 88E issue 2.4 shares for every XCD share held, plus 0.7 88E shares for every XCD listed option.

The offer values XCD at $0.012, which is a 71% premium to the company’s closing price yesterday of $0.007 and is 140% higher than XCD’s closing price on 24 April of $0.005.

Once the merger has been completed, XCD shareholders will own 20% of the new entity.

The two groups outlined this morning that the merged entity will form a diversified portfolio of exploration projects on Alaska’s North Slope.

The three key projects will include Project Icewine, Yukon leases and Project Peregrine with the assets at various stages of development.

Shares in 88 Energy closed at 0.25p on Wednesday afternoon.

The duo says the combined company will have increased scale, market presence along with higher funding capability and trading liquidity across the ASX and London AIM exchanges.

The new company will also possess a board, management and technical team with proven capabilities and a track record for delivering project objectives, this morning’s statement said.

David Wall, 88E’s Managing Director said the combined company will leverage 88E’s geological and operational expertise specific to the North Slope of Alaska where the group has drilled four wells and acquired several 2D and 3D seismic data.

This includes the successful Brookian oil plays in which 88E retains “significant upside exposure” through its portfolio which covers 330,000 net acres co-located on the North Slope.

Commenting on the merger, XCD’s Chairman Peter Stickland said the deal was “compelling” for its shareholders due to the “demonstrated operational capability” at Alaskan North Slope.

He added that the XCD board “unanimously recommends” 88 Energy’s takeover offer to shareholders.

To date, already 18.5% of XCD’s shareholders have entered into pre-bid acceptance agreements in addition to 6.8% of listed option holders.

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