Strike Energy confirms merger deal with Warrego Energy

SYDNEY, AUSTRALIA: Strike Energy confirmed that on 16 September 2022 it submitted a confidential, non-binding indicative all-scrip merger proposal to the Warrego Energy Board.

The Initial Merger Proposal provided that the transaction would be implemented through a scheme of arrangement under which Warrego shareholders would receive 0.7142 new Strike Energy shares for each Warrego Energy share held.

In addition, Warrego shareholders would also receive (on a pro rata basis) the full value of Warrego’s Spanish assets via the distribution of the net proceeds resulting from the sale of these assets.

Subsequent to this proposal, on 16 October 2022 Strike provided a revised merger proposal under which Warrego Shareholders would receive 0.7521 new Strike shares for each Warrego share held, in addition to the net proceeds resulting from the sale of Warrego’s Spanish assets.

Terms of the Revised Merger Proposal were consistent with the Initial Merger Proposal, with the exception that, at completion of the Scheme, one Warrego Nominee Director would be appointed to the merged entity’s board.

Following submission of the Revised Merger Proposal and subsequent discussions, on 27 October 2022 the Board of Warrego confirmed (subject to satisfactory confirmatory due diligence, entry into binding transaction documents, and customary fiduciary outs) they intended to unanimously recommend a
merger between the two companies at a share exchange ratio of 0.7750 new Strike Shares for each Warrego share held, in addition to the net proceeds from the sale of Warrego’s Spanish assets (“Agreed
Merger Ratio”).

The transaction structure, and other terms were consistent with the Revised Merger
Proposal.

Subsequent to 27 October 2022 both companies have been engaged in confirmatory due diligence and negotiation of appropriate binding transaction documentation under a mutual confidentiality agreement.

Upon implementation of a Scheme at the Agreed Merger Ratio, Strike shareholders would own ~72% of the combined entity (inclusive of Strike’s existing ~7.6% ownership of Warrego), and Warrego shareholders excluding Strikes share would own ~28%.

Prior to the value realised for Warrego’s Spanish assets to be distributed to Warrego shareholders, the Agreed Merger Ratio implies a transaction price of A$0.186 per share (based on Strike’s 30-day VWAP as at 27 October 2022) and represents a:
• 40.6% premium to Warrego’s undisturbed price;
• 34.2% premium to Warrego’s 30-day volume weighted average price (“VWAP”); and
• 33.7% premium to Warrego’s 90-day VWAP3.

Strike continues to believe that a merger between Strike and Warrego at the Agreed Merger Ratio represents an extremely attractive opportunity to deliver compelling value accretion to both Strike and Warrego shareholders.

A merger between Strike and Warrego would create the leading ASX-listed Net Zero 20304 Perth Basin integrated energy, fertiliser and renewables company that would consolidate 100% ownership across the Erregulla region with a combined pro-forma ownership of 1,208 PJ of conventional 2P Reserves plus 2C Resources, of which 550 PJ of 2P Reserves and 301 PJ of 2C Resources exist within the Greater Erregulla permits.

The consolidated ownership of these Greater Erregulla permits provides the opportunity to optimise, accelerate and maximise the development strategy of the high-quality conventional gas resources,
focussing on the physical integration of Strike’s 100% owned 3,500 hectares of land at the Mid-West Low Carbon Manufacturing Precinct for hosting critical infrastructure.

The combined entity would also possess a world class development portfolio in the low-risk jurisdiction of the Perth Basin in WA consisting of gas, hydrogen, renewable energy, carbon capture developments
including Strike’s flagship and nationally significant Project Haber low-carbon fertiliser development.

Strike has appointed Macquarie Capital (Australia) as financial advisor and DLA Piper as legal advisor.