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Empire Energy snaps up Beetaloo’s Pangaea, readies raising

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ASX-listed gas play Empire Energy will double down on its efforts in Northern Territory’s Beetaloo Basin after winning an auction to buy Paul Fudge’s Pangaea.

Street Talk can reveal Empire Energy will pay about $55 million for Fudge’s 82.5 per cent stake in Pangaea resource base, in a cash and scrip deal to be announced on Wednesday.

The Australian government is handing out grants to encourage exploration in Northern Territory’s Beetaloo Basin.  

The offer will be funded with a $30 million equity raising arranged by Morgans and Blue Ocean. Empire Energy was advised by David Wood’s amicaa, while Morgan Stanley ran the auction for Pangaea.

Empire Energy shares went into a trading halt ahead of the raising. The company and its advisers have already lined up a handful of institutions to cornerstone the two tranche placement at 30¢ a share. The stock last traded at 35.5¢.

The deal is expected to see Pangaea’s Fudge, a well known Australian gas sector executive and dealmaker, emerge with about a 30 per cent stake in Empire Energy and a board seat.

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It’s a big win for Empire Energy, which will increase its best estimate prospective gas resource by 157 per cent.

The company will pay $5 million cash, give Pangaea about a 30 per cent interest in the combined businesss and 8 million options with a 70¢ exercise price.

The remaining 17.5 per cent of Pangaea is owned by Houston-based Energy and Minerals Group. Empire Energy is expected to seek to also acquire that stake.

Sarah Thompson has co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones. Email Sarah at sarah.thompson@afr.com
Anthony Macdonald is a Chanticleer columnist. He is a former Street Talk co-editor and has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies. Connect with Anthony on Twitter. Email Anthony at a.macdonald@afr.com
Tim Boyd is a journalist, based in Sydney, who writes for the Street Talk column. Connect with Tim on Twitter. Email Tim at tim.boyd@afr.com

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