American Patriot knocks back takeover bid in favour of expanded JV
Published 29-JUL-2016 14:39 P.M.
|
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Major shareholders of American Patriot Oil & Gas (ASX:AOW) have knocked back a takeover offer as undervaluing the company in favour of a joint venture arrangement aimed at picking up assets on the cheap.
After a long-running due diligence process, AOW will not be taken over by JV partner Running Foxes Petroleum (RFP) – which in February launched a 22c per share takeover bid of AOW.
This valued AOW at about $35 million.
After doing the rounds with major shareholders though, AOW came to conclusion that the deal would not meet acceptances – and instead came up with an alternate plan.
Instead, it has entered into an agreement with RFP to jointly acquire distressed assets, with a focus on assets which merely need infill drilling to get to production.
One of the reasons the deal was knocked back by major shareholders was that the offer was seen to be made in a low point of the oil-price cycle, and AOW could garner better offers in the event the oil price picks up.
This is not guaranteed though, as commodity prices are volatile – always consult a professional before deciding whether or not to invest.
AOW said that the JV was already conducting due diligence on such as asset, and it would update the market in the coming weeks on this.
“We appreciate the patience of shareholders during the takeover proposal, however we believe our joint acquisition strategy has the potential to unlock significant value for AOW shareholders in the near term given the number of attractive, distressed properties we have sourced,” AOW CEO Alexis Clark said.
In drilling news, it said that RFP would start drilling as part of a five-well campaign at its Rough House project “shortly”.
The first well in the program is due to be drilled in the third quarter while the second well is slated for drilling early next year.
AOW is free-carried on the first two wells.
RFP has a 70% stake in the wells while AOW holds the remaining interest – in exchange for AOW not spending cash on the first two wells.
The area in question has been the host of several producers in the past, including multiple +1500 barrels of oil per day producers.
About AOW
AOW holds a number of oil and gas leases in four states of the US, with the Northern Star project in Montana and the Rough House project in Colorado considered the leading assets.
Its overarching strategy is to work up assets to a point where it can farm them out to a bigger partner, while retaining a working interest in the asset and more often than not receiving a free carry on wells in the program.
Location of AOW’s projects
In the case of Running Fox, it farmed into Rough House earlier this month, taking a 70% operating stake in the asset and committing for up to five wells.
In September last year it received an offer from a private company headed up by Edward Mike Davis to buy the assets of AOW for $20 million in cash.
AOW knocked back the deal, calling it “opportunistic” and wanting to test the market for a higher offer.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.
