With the clock running out on an A45 cents/share takeover offer from Aurora Oil & Gas Ltd., directors of Eureka Energy, are being coy, advising investors to sit tight until its June 15 expiration "as there is the potential for important developments." Indeed, it was reported that privately held Lonestar Resources Inc. had made a competing offer that would be considered over the weekend.
More than a month ago Australia's Aurora Oil and Gas made an A$107 million (US$105.6 million) unsolicited offer for Eagle Ford Shale-focused Eureka Energy, also of Australia (see Shale Daily, May 1). At the time Eureka Energy directors urged shareholders to reject the offer. "The board considers the offer to be opportunistic and designed to solicit shareholders to sell their shares at a time when the company's strategic direction and underlying potential is still emerging," Eureka Acting Managing Director Bill Bloking said (see Shale Daily, May 8).
As the offer period winds down, Aurora is prohibited from raising its bid. On Friday Eureka Energy said two directors "remain of the unanimous view that the offer undervalues Eureka." However, one director cracked the door and said he "recommends that [shareholders] accept the offer in the absence of a superior offer."
Fort Worth-based Lonestar Resources, which holds more than 5,500 acres in the Eagle Ford Shale of South Texas, made Eureka an alternative offer, as reported by The Wall Street Journal. Aurora and Lonestar both have Eagle Ford Shale acreage. Lonestar operations are focused onshore with primary activity in the Fort Worth Basin (Barnett Shale), the Eagle Ford and the Williston Basin in Montana, the company said on its website.
This would make Lonestar potentially another good fit with Eureka.
Eureka has three core assets with a combined net acreage position of 6,742 acres, all focused on the Eagle Ford, according to the Australian company's website. "The assets are at different levels of maturity throughout the value chain, from ongoing production and development, appraisal and development to initial technical development," the company said.
The assets include the Sugarloaf in Karnes County, TX, in which it has a 6.25% working interest (WI); the Pan de Azucar in Fayette County, TX (100% WI), which includes the Black Jack Springs Drilling Unit (9.4% WI); and the Brioche in Burleson and Washington counties (100% WI).
"The [Eureka Energy] directors encourage shareholders to obtain regular advice from their financial advisor regarding the offer and maintain a vigilant watch for ASX [Australian Securities Exchange] announcements from Eureka and Aurora until the end of the offer period," Eureka Energy said. "Shareholders are encouraged to check for announcements from Eureka and Aurora on at least a daily basis."