Texas Based Magnum Hunter Bids for Australia's Ambassador Oil & Gas

Texas based Magnum Hunter Tuesday announced its intention to make an off-market takeover offer for Australian unconventional oil and gas company Ambassador Oil and Gas.

Ambassador holds an exploration license in Cooper Basin in Australia. According to Ambassador, PEL 570, situated in the South Australian portion of the Cooper basin, has potential gas in place of up to 20 trillion cubic feet, contained in unconventional rock and coal seams.

The Magnum offer is priced at a significant premium to the Drillsearch offer and Ambassador's historical trading prices, Magnum Hunter said.

“The Magnum Hunter offer represents a 20% premium to the current implied value of the offer announced by Drillsearch Energy on 28 May 2014 and a 74% premium to the closing price of Ambassador shares of $0,195 on Friday 23 May, the trading day prior to Ambassador entering into a trading halt before the announcement of the Drillsearch offer,” the US company said.

The Offer consideration will be one share of Magnum Hunter stock for every 27.8 Ambassador shares.

Last month, Drillsearch Energy made a conditional off-market takeover offer for Ambassador Oil and Gas, valuing the company at about A$40 million. The offer constituted of one Drillsearch share for every 5.4 Ambassador shares.

In PEL 570 Ambassador is fully carried by New Standard Energy for a A$42.5 million exploration program. The program specifically targets the permit’s unconventional resource potential in the tight sands and shale in the Permian section of the Patchawarra Trough. This program is to be operated by New Standard Energy, with technical support from Magnum which has also taken a 17% interest in New Standard.