Seeking Alpha

Magnum Hunter to offer ~$45M for Ambassador Oil, to issue 5.1M shares

  • Magnum Hunter (MHR) -2.7% premarket after disclosing that it filed with the Australian Securities Exchange a notice of intention to make a takeover offer for Ambassador Oil and Gas (AOIGF).
  • MHR plans to issue ~5.1M common shares to acquire 100% of Ambassador; it would offer one share of stock for every 27.8 Ambassador shares, implying total consideration of ~US$45.2M.
Comments (14)
  • dacama1
    , contributor
    Comments (210) | Send Message
     
    Hmmm..
    10 Jun, 09:04 AM Reply Like
  • Michael_Phillips
    , contributor
    Comments (480) | Send Message
     
    As an MHR shareholder this makes me nervous. 12,000 acres in Colorado? Operations in Australia? This looks like the sort of deal put together by unfocused, undisciplined managers who saw a chance to leverage their very high stock price to acquire assets that they may not really need.
    10 Jun, 09:10 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    I'm not a big fan of this announcement, but its for no cash, which makes me less concerned.

     

    Sorry I just looked at Ambasador's website and see they have Colorado acreage. The deal is definitely targeting Australia, not the Colorado acres.
    10 Jun, 09:14 AM Reply Like
  • Clayton Rulli
    , contributor
    Comments (2472) | Send Message
     
    this offer is 93% premium to closing price, nice
    10 Jun, 09:16 AM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    They came over the top of a bid by Drill Search. Drill Search highlights in their presentation for the take over that New Standard, backed by the technical expertise of Magnum Hunter, would operate the blocks. I'm guessing Gary decided that if they are the ones transferring all the technology, why not control all the WI in the acreage.
    10 Jun, 09:36 AM Reply Like
  • rliddle
    , contributor
    Comments (2) | Send Message
     
    So Mike, previous to this deal (I gather from your comment) that MHR had a minority WI in the Australian Projects and will now have the majority ownership + plus operations. Question, I have been reading that MHR was trying to dump non core assets and concentrate on the Appalachian Basin?
    Seems like a small change of strategy? Why not dump sell to Drill Search as well.
    10 Jun, 12:41 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    When MHR sold the south Texas acreage to New Standard Energy a few months back, MHR took at 17% stake in NSE as part of that deal. NSE had a ~47% interest in the PEL 570 block that Ambassador holds the remaining ~53%.

     

    As to why they are doing this, its no cash out of MHR's pocket, which means it wont affect the budget this year. I'm assuming that someone took a look at the data and has decided that if they frac this basin EURs and IP rates go through the roof, so Evans is trying to lock up some very cheap "lottery" type acreage. IDK, kind of a strange thing to do, but they've had a few months to look at the data in the Cooper Basin, and Evans has a history of buying acreage no one wants and selling it for tens of thousands of dollars an acre a few years later. Not a reason to sell the stock off today, thats for sure.
    10 Jun, 03:19 PM Reply Like
  • rliddle
    , contributor
    Comments (2) | Send Message
     
    Thanks for your input Mike
    10 Jun, 03:58 PM Reply Like
  • FJ Miller
    , contributor
    Comments (6) | Send Message
     
    Managing Partner,,,Tech Point services,,,,seeking High yield securities,,,combined with Option Strategies...previously involved in Oil and gas well service business
    10 Jun, 09:54 AM Reply Like
  • dialapalms@yahoo.com
    , contributor
    Comment (1) | Send Message
     
    If Gary thinks it's a good deal, then you better bet it's a good deal. Dial Dunkin
    10 Jun, 01:28 PM Reply Like
  • jolacious
    , contributor
    Comments (89) | Send Message
     
    My view may be simplistic, and possibly naïve. Hell Mr. Evans would have made great real estate agent. He just loves property, I hope the new venture enhances our assets in the foreseeable future. I trust his instincts. What about PVA? The market it appears is not so endearing towards the proposition. Perhaps we may convince it when it becomes productive. I wonder if any of you tuned in with the conversation between Mr. Cramer and Mr. Evans in their latest meeting. It was alleged that the well being drilled in West Virginia, is going to be mahoosive.
    10 Jun, 03:04 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    He's made that comment to a few different publications - saying he wants to beat the Rice Bigfoot well at 42.5 MMcfe/d. We'll know in another couple months!
    10 Jun, 03:20 PM Reply Like
  • jolacious
    , contributor
    Comments (89) | Send Message
     
    @MM, it's nice to read your comments as usual. When is your new report regarding MHR due? Perhaps we should be watching GST, its stock price has been on a tear all year. I believe some of their acreage is in the Utica, I am awaiting an entry point. What do you think? ATB.
    10 Jun, 07:11 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2482) | Send Message
     
    Ive been working on something a few times, and life just keeps getting in the way - soon I hope, but we shall see. As for GST, I feel like its ran away from me - i had someone recommend I check it out when it was around $1, and I decided i liked MHR better. I havent really been following it, but I think they have some acreage relatively close to where MHR is in WV.
    10 Jun, 07:38 PM Reply Like
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