Gawler listed on the Australian Stock Exchange last September as a uranium and base metals exploration company.
Two months later, Aurora announced it was exchanging a 30% interest in a shallow-water Texas Gulf Coast project for a major shareholding in Gawler.
Elixir and Gawler today said the merged group would combine emerging Gulf of Mexico production with high-impact North Sea exploration.
“It will be well-funded, allowing growth of the producing assets to run in parallel with an active and highly prospective exploration program,” Elixir said.
“The boards of Elixir and Gawler believe the benefits of the merger are compelling.”
Elixir said those benefits would include a 30% working interest in the High Island A$268 oil and gas development project in shallow water offshore Texas.
The project, which is due to come onstream in September, will initially produce at gross rates of around 20 million cubic feet of gas per day.
It said other benefits would include a portfolio of North Sea exploration licences containing drillable prospects and access to “US deal flow”.
Elixir said Gawler’s board unanimously recommended that all Gawler share and option holders vote in favour of the merger proposal, in the absence of a superior offer.
“Gawler Board members intend to vote in favour of the proposal when a shareholders’ meeting is convened,” it said.
“In addition Gawler’s largest shareholder, Aurora Oil & Gas, has committed to vote in favour of the merger, in the absence of a superior offer.”
Elixir’s consideration to be paid represents an 11.4% premium for Gawler shareholders on the basis of both companies’ 30-day volume weighted average share prices and last trades prior to the current trading halts.
Under the proposed “merger of equals”, existing Elixir shareholders will represent 52% of the enlarged company and Gawler shareholders the remaining 48%.
Gawler share and option holders will receive one Elixir share for each Gawler share held and one Elixir share for every five Gawler options held.
In order to progress In order to progress development of the High Island oil and gas project, Elixir will provide Gawler with a total funding package of up to $5 million while the merger process occurs.
The package will be made up of equity and debt funding elements. Elixir will subscribe for a share and option placement in Gawler of almost 12.5 million shares at 20c per share and an equivalent number of options at 1c per option, raising about $2.6 million.
Gawler will issue the first tranche of about 3.75 million shares and 3.75 million options immediately under its current 15% placing capacity. The issue of the remaining tranche of placement shares and options requires Gawler shareholder approval and will increase Elixir’s holding in Gawler to 20%.
If it goes ahead, the merged company will be listed on both the Australian Stock Exchange and London’s AIM.
