Strata-X and Real Energy merge to gain Queensland gas critical mass
The merged company, Pure Energy Corporation, will combine 11.8 trillion cubic feet of gas resources.
A bigger Queensland gas player is the plan as Strata-X (ASX: SXA) and Real Energy Corporation (ASX: RLE) agreed to merge.
The combined company, to be known Pure Energy Corporation, will also include Strata-X’s coal seam gas (CSG) project in Botswana.
The two companies are already involved in a Queensland joint venture and claim the merger has the potential to create the next ASX energy growth stock.
“With the significant resources in the three [Queensland] gas projects and finding the keys to unlock those resources, this goal is achievable,” the pair stated.
This deal comes on the heels of 88 Energy (ASX: 88E) absorbing XCD Energy (ASX: XCD) to form a combined Alaskan oil and gas player with greater heft.
Creating a ‘meaningful’ gas business
Strata-X will offer one of its shares for every three in Real Energy. The directors of both companies have agreed that no premium will be applied to either share issues, and Strata-X will also delist from the Toronto Venture Exchange.
The companies said the scheme of arrangement is a logical consolidation of complementary portfolios, mainly onshore, and will “create a meaningful gas business”.
Strata-X has Project Venus, covering 153sq km within the main Walloon CSG zone in the Surat Basin and immediately adjacent to gas infrastructure. There are several previously drilled CSG and conventional wells located within and around the acreage.
That project has already become a joint venture between the two merging companies.
Strata-X’s Serowe CSG project in Botswana has been farmed out to a privately-owned Australian company which is exploring for a potential multi-trillion cubic feet of gas resource. Strata-X sees Serowe as a growth driver in 2020 and beyond.
Real Energy has interests in the Cooper and Surat basins with two large Queensland permits —ATP 927P known as the Windorah gas project and ATP1194PA, the East Flank oil project.
New company will target emissions reduction and hydrogen
The vision for the newly created Pure Energy will be to lower emissions through the substitution of methane for coal and diesel.
Pure Energy is also investigating the building of a methane-to-hydrogen plant in Gladstone.
One of the merged company’s goals will be converting methane to hydrogen and including value-add graphite products using the hybrid method pyrolysis technology.
There will also be cost savings through removing duplicate administrative functions.
Strata-X executive chairman Ron Prefontaine will become chairman of the new entity while Real Energy managing director Scott Brown will take the respective role in Pure Energy.