1‌3:41 AEDT 08 Dec 2022 Empire Energy hires Amicaa as defence...

1‌3:41 AEDT 08 Dec 2022 Empire Energy hires Amicaa as defence advisor amidst industry consolidation – MD

Australian oil and gas companyEmpire Energy [ASX:EEG] has hired Sydney-based corporate advisorAmicaa as defence advisor as the industry is set to see more consolidation activity, Managing Director Alex Underwood said. Amicaa, which in April 2021 advised Empire Energy on itsacquisitionofPangaea’s Beetaloo Sub-basinportfolio in Australia’s Northern Territory (NT),has also been mandated for defence capabilities for the AUD 147m (USD 98m)-market cap company, Underwood toldMergermarket. Hedeclined to comment if Empire Energy had already received a takeover offer. The defence mandate comes as deep-pocketed suitors compete for scarce resources amidst depressed share prices, as is shown in the case of Australian oil and gas companyWarrego Energy[ASX:WGO], said the MD. Warrego Energy is currently entangled in a three-way bidding battle byStrike Energy[ASX:STX],Beach Energy[ASX:BPT] andHancock Energy, which are all targeting Warrego’s assets in the Perth Basin. Warrego’s share price has gained 76% since the first takeover offer emerged in November 2021, according to the ASX. “If you look at what's happening with Warrego energy over in the Perth Basin, it's a very interesting example of what can happen with small oil and gas companies that are sitting on very large resources,” Underwood said. Given the scarce nature of this resource, Australia has an enduring supply challenge for gas, he continued. “When you have weak equity markets, very high gas prices and shortages, and deep pocketed suitors that are around looking for those larger resources, M&A activity is inevitable,” he said. In the US, the shale oil and gas sector went through consolidation during Covid-19 as companies tried to cut overheads by merging, which allowed those companies to self-fund operations rather than relying on capital markets, Underwood said. Similarly, this could happen in Australia’s upstream oil and gas sector throughout 2023, he noted. Australian gas and coal holding companyPangaea Resourcesholds an 18.2% stake in Empire Energy, according to an August investor presentation. Beetaloo production Empire Energy’s current focus is to prove its large resource base at Beetaloo is commercially viable, Underwood said. Phase 1 of production is expected to begin by late 2024 to early 2025 and requires production approvals from the NT government and traditional owners, he said. Phase 2 may require billions of dollars in capital, and as a relatively small company with large resources, Empire Energy will be attracting interest from joint venture (JV) partners in the future once it has secured sales agreements, he said. Potential JV partners could be large LNG consumers from Japan, Korea and China that want long-term supplies, as well as large upstream oil and gas companies, particularly those having seen significant success in the US shale gas space, he said. Empire Energy has a memorandum of understanding (MoU) with the NT government’sPower and Water Corporation for gas sales and transportation, as well as an MOU withAPA Group [ASX:APA]for transportation services, as announced previously. Empire Energy’s current cash balance is AUD 32.7m, according to an ASX release today (8 December). byJames Arbuthnottin Sydney