Under the agreement, Doriemus will acquire all the issued capital of Oilex’s subsidiary CoEra Ltd, which will own all of Oilex’s direct and indirect interests in the Cooper-Eromanga Basin.
Once Doriemus has acquired CoEra, it will have a 79.33% direct interest in petroleum licences PEL 112 and PEL 444, which comprise 2,252 square kilometres. It will also have an option to secure the remaining 20.66%.
Additionally, Doriemus will have the right to acquire 27 petroleum retention licences from Senex Energy Ltd – with the licences collectively known as the Northern Fairway PRLs and spanning 2,445sq km.
Doriemus chairman Keith Coughlan described the deal as a “transformational transaction” with the potential to deliver “significant value” for both Doriemus and Oilex.
“The Northern Fairway PRLs represent a very significant acreage position with a highly prospective part of the Cooper-Eromanga Basin that has been essentially locked up by a major oil and gas company for 15 years.”
Upon completion of the transaction, Doriemus will issue Oilex 28.3 million CHESS depositary interests which is equivalent to the same number of shares.
Doriemus will also assume Oilex’s obligations under the Senex agreement to acquire the Northern Fairway PRLs, which includes a $1.1 million payment upon transfer of ownership from Senex to CoEra.
It will also take on payment of future PRL fees and work obligations including well commitments in PEL 112 and PEL 444.
Doriemus estimates the PRL fees for 2020 will amount to $1 million.
New managing director and share placement
As part of Doriemus’ new focus on the Cooper-Eromanga Basin, it has appointed former Drillsearch Energy chief executive officer and current Oilex chairman Brad Lingo to its board as managing director.
Mr Coughlan said he was looking forward to Mr Lingo replicating the “significant success” he had in the basin with Drillsearch, which was grown to a $700 million-plus company before it was taken over by Beach Energy in 2016.
In addition to due diligence and shareholder approvals, the acquisition is also contingent on Doriemus completing a minimum $3.5 million capital raising, with a target of $5 million.
Cooper-Eromanga Basin assets
To date, the Cooper-Eromanga Basin has produced about 1.52 billion barrels of oil equivalent.
According to Doriemus, the basin has historically yielded a high exploration success rate, with low cost development pathways.
The company added it remains under-explored and under-developed.
The Fraser Institute has rated the region as one of the most “attractive petroleum jurisdiction in Australia”.
“With the ability to undertake cost-effective exploration, ready access to existing infrastructure and strong east coast gas markets, the onshore Cooper Basin is the perfect place for junior oil and gas companies,” Mr Lingo noted.
“When you combine that with the prized acreage position that will be acquired from Senex, I am confident that Doriemus, on completion of the acquisition, will have the pieces required to drive significant value for shareholders.”
“That is exactly what I did in the Cooper Basin with Drillsearch when I took it from a junior explorer to a mid-cap company and we will be looking to replicate that highly successful strategy with Doriemus.”
He added the transaction enables Oilex shareholders to retain “significant exposure” to the assets via its holding in Doriemus, without the ongoing funding obligations.
Investors reacted positively to the news pushing Doriemus’ share price up more than 16% to $0.035 in early morning trade, while Oilex’s shares remained steady at $0.003.