• Strike to escalate the pace of development in its Perth Basin business through the earnings and cashflow accretive acquisition of Talon.
• Strike and Talon have entered into a binding Scheme Implementation Deed under which Strike will acquire all the issued shares in Talon by way of a Scheme of Arrangement. On implementation of the Scheme, Talon shareholders will receive 0.4828 new Strike shares for each Talon share held.
• In parallel with the Scheme, Talon will look to demerge Talon’s Mongolian asset to the benefit of Talon shareholders to potentially deliver additional value.
• The Scheme is unanimously endorsed by the Board of Directors of Talon.
• The implied offer price of A$0.2122 for Talon’s Perth Basin business alone is a ~21% premium to Talon’s closing share price as at 11 August 20233, excluding any additional value that may be realised for Talon shareholders via the potential demerger of Talon’s Mongolian assets.
• On a pro forma basis, Strike shareholders will own approximately 89% and Talon shareholders will own approximately 11% of all issued Strike shares upon implementation of the Scheme.
• Strike has agreed to provide Talon with a A$6 million interim convertible funding facility to fund Talon’s capital requirements through the scheme process.
• The acquisition will generate material corporate and operational synergies with the capacity to generate an initial annualised revenue of in excess of $82 million from the Walyering gas field alone. 

Strike Energy has entered into a binding scheme implementation deed with Talon Energy under which Strike will, subject to the satisfaction of various conditions, acquire all the issued shares in the capital of Talon.

Talon shareholders will receive 0.4828 new Strike shares for each Talon share held. In addition, Talon will look to demerge it's Mongolian asset with the potential for its shareholders to retain an interest in the assets along with A$850,000 cash (less any costs incurred in connection with the demerger and certain other costs and funding provided for the Mongolian assets by Talon during the Scheme/demerger process) via a potential spin-out of
those assets into a separate vehicle to be completed prior to implementation of the Scheme (Mongolian Spin-Out).

The acquisition is earnings and cashflow accretive for Strike and will provide a platform in which Strike can escalate the pace of development of its highly attractive Perth Basin gas assets.

Talon’s Board of Directors unanimously recommend the proposed transaction (in the absence of a superior proposal and subject to the independent expert concluding, and continuing to conclude, that the proposed transaction is in the best interests of Talon shareholders), which is strategically compelling and logical for Talon shareholders.

Under the proposed Scheme, and on a pro forma basis, Talon shareholders will own ~11% and Strike shareholders will own ~89% of the combined Company.

Transaction Rationale

The acquisition of Talon is compelling for Strike’s shareholders given the potential for strategic and financial benefits, which include:

• the combined company will have the capacity to generate an initial annualised cashflow from the Walyering gas field alone in excess of A$82 million
• Strike will be able to remove significant costs via corporate and operational synergies through collapsing the joint venture with Talon;
• Strike’s balance sheet will be further improved, with an increased ability to access debt markets and self-fund development projects along with the combined exploration portfolio;
• Strike will be able to apply its Perth Basin operating and development expertise in order to exploit the combined group’s assets; and
• the combined entity will have an aggregate 1,022 PJ of independently certified Perth Basin conventional gas 2P Reserves and 2C Resources.

For Talon shareholders the all-scrip acquisition represents an immediate and attractive premium with an implied transaction price for the Perth Basin business of A$0.212 per Talon share, which is a ~21% premium to Talon’s closing share price as at 11 August 20237. In addition, there is the potential that Talon shareholders will retain an interest in the Mongolian assets via the Mongolian Spin-Out.

Strike MD & CEO, Stuart Nicholls commented:
“This is an earnings accretive transaction for Strike that will simplify Strike’s operations and provide a platform to remove the costs in operating and managing its existing joint venture with Talon. The combined group will have the capacity to generate initial annualised cashflows in excess of A$82 million from the Walyering gas field alone. The additional free cashflow generation will support an acceleration of Strike’s Government endorsed Perth Basin development strategy”.

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