Horizon on Monday launched a takeover bid for Cue, offering 0.8 cents in cash and 0.5625 Horizon shares for each Cue share under the deal, which Horizon said came to an implied value of 14.3 cents for each Cue share.

Cue shares came out of a trading halt this morning, and jumped more than 9% to be changing hands for 14.2 cents.

No decision as yet

The company's board also put out a statement about the takeover offer, which didn't shed much light on whether they thought the proposed deal was fair or not.

The Cue release to the market on Wednesday morning simply said that the board was considering the offer and that shareholders did not have to do anything at this point.

The Cue Board added:

The Cue board has appointed an Independent Board Committee (IBC), consisting of its current independent directors, Peter Hood AO, Greg Bishop and Ric Malcolm, to evaluate and respond to the Horizon takeover offer. The IBC, together with its independent advisers, is currently assessing the proposed offer and will keep shareholders informed as appropriate.

Deal to provide scale

Horizon Chairman Bruce Clement said in a statement when the bid was launched that the tie-up of the two companies made sense.

The Horizon board believes that, if Horizon acquires 100% of the Cue shares on issue, potential synergies will be available to the combined group, including from the consolidation of overlapping joint venture interests and more efficient joint venture management. The combination of Horizon and Cue, if Horizon acquires 100% of Cue shares, may unlock up to $2 million of annualised synergies. Horizon expects that the majority of these cost synergies, if realised, would be progressively achieved over approximately 12-18 months following successful offer completion.

Mr Clement said the companies had a long-standing relationship, having been joint venture partners in the Maari field for more than 20 years, "and more recently through Horizon's 2024 acquisition of a 25% interest in the Mereenie field in Australia, in which Cue holds a 7.5% interest".

He added that if the companies came together it would create an ASX oil and gas company with nine producing assets across five countries in Southeast Asia and Australia.

Horizon shares were 3.8% lower at 25.5 cents on Wednesday morning.

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The larger oil and gas company also said in a statement to the ASX on Monday that it had acquired a stake of 19.9% in Cue.

Offer in cash and scrip

Horizon Oil is offering 0.8 cents in cash and 0.5625 Horizon shares for each Cue share under the deal, which Horizon said came to an implied value of 14.3 cents for each Cue share.

Cue shares closed at 13 cents on Friday.

Horizon said in its statement to the ASX:

The offer consideration therefore represents a 10% premium to the closing price of Cue shares of $0.13 on the last practicable date, and a premium of approximately 16.3% to the 30-day VWAP (volume weighted average price) of Cue shares of $0.123 on ASX up to and including the last practicable date. If Horizon is successful in acquiring all of the Cue Shares on issue that Horizon does not have a relevant interest in, existing Cue Shareholders will (in aggregate) hold 16.31% of the combined group and existing Horizon Shareholders will (in aggregate) own 83.69% of the combined group.

Cue has so far made no statement regarding the offer.

Horizon said in its bidder's statement that it had acquired its 19.9% stake in Cue from Echelon Resources Ltd (ASX: ECH) at 11.5 cents per share.

Synergies make sense

Chairman Bruce Clement said the Horizon Oil takeover bid made sense for Cue shareholders.

The Horizon board believes that, if Horizon acquires 100% of the Cue shares on issue, potential synergies will be available to the combined group, including from the consolidation of overlapping joint venture interests and more efficient joint venture management. The combination of Horizon and Cue, if Horizon acquires 100% of Cue shares, may unlock up to $2 million of annualised synergies. Horizon expects that the majority of these cost synergies, if realised, would be progressively achieved over approximately 12-18 months following successful offer completion.

Mr Clement said the companies had a long-standing relationship, having been joint venture partners in the Maari field for more than 20 years, "and more recently through Horison's 2024 acquisition of a 25% interest in the Mereenie field in Australia, in which Cue holds a 7.5% interest''.

He added:

With common interests in assets and non-operators in those permits, common geographical focus and similar strategies, Horizon considers the proposal to be logical. If accepted by all eligible Cue shareholders, the offer would result in an effective merger of the two entities creating an ASX-listed oil and gas producer with nine producing assets across five countries in Southeast Asia and Australia.

Horizon was valued at $390.6 million at the close of trade on Friday, while Cue was valued at $90.9 million.

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In afternoon trade on Thursday, the All Ordinaries Index (ASX: XAO) is down 0.1%.

But energy stocks Karoon Energy Ltd (ASX: KAR) and Cue Energy Resources Ltd (ASX: CUE) are up 3% and 40% respectively following the release of their half-year earnings results.

Here's what they reported.

Karoon share price lifts on profit boost

The Karoon share price is marching higher after the ASX energy share reported underlying net profit after tax (NPAT) of US$145 million, up 129% from the prior six months.

The company attributed the boost in profits to higher hydrocarbon sales, improved oil price realisations and lower unit production costs.

Statutory NPAT of US$122.5 million was up 43% from US$85.4 million in the prior half year. This included one-off costs relating to Karoon's Who Dat acquisition, along with hedging and foreign exchange losses.

Sales revenue of US$413 million increased 54.5% from the previous half-year. While underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$283 million increased by 94%.

Karoon held cash and cash equivalents at 31 December of US$170 million.

Commenting on the results lifting the ASX energy share today, CEO Julian Fowles said:

Karoon achieved underlying NPAT of US$144.7 million, which was a record for the company for a six-month period. Baúna Project sales volumes and realised oil prices both increased, up 36% and 13% respectively when compared to the prior six months.

In addition, we received the first contributions from the Who Dat acquisition in the US Gulf of Mexico, albeit for only 11 days.

Which brings us to…

ASX energy share Cue rockets amid special dividend

The Cue Energy share price is shooting out the lights today on the heels of the company's own half-year results (1H FY 2024).

The ASX energy share achieved a 22% year on year increase in six-month revenue to $29 million.

Underlying EBITDAX (which excludes items like exploration costs) came in at $19 million, up 21% from 1H FY 2023.

And NPAT leapt 34% year on year to $9 million.

This saw management declare a 2 cent per share special dividend, which they said was supported by strong cash flow and cash reserves.

Cue had a cash balance of $23 million as at 31 December, up from $15 million at 30 June.

Commenting on the strong results sending the ASX energy share rocketing today, Cue CEO Matthew Boyall said, "We're building on a consistent trend of growth, with revenue increasing more than 200% over the past four years."

Boyall added:

This success is fuelled by several key factors including strong production performance, disciplined reinvestment and an ongoing focus on lowering costs. Our Indonesian assets, particularly the Mahato PSC, were significant contributors, generating $16.4 million in revenue.

The post 2 ASX energy shares going gangbusters on today's earnings results appeared first on The Motley Fool Australia.

At the time of writing, the oil and gas company's shares are up 9.21% to close at 8.3 cents.

What did Cue announce?

Cue Energy advised that it has now begun extracting oil from its PB field in the Mahato PSC.

Located in Indonesia, Mahato PSC is a 5,600sq km basin that is close to several producing oil fields. Multiple surveys and exploration results have mapped the area to contain a highly lucrative resource opportunity.

According to Cue's release, the start of operations follows the settled dispute between the company and its joint venture partners. The disagreement arose from Texcal Mahato EP, which operates the Mahato PSC.

Cue previously stated that Texcal and other joint venture partners attempted to exclude the company from two wells, named PB-1 and PB-2. Cue's subsidiary, Cue Mahato holds a 12.5% interest in Mahato PSC.

As part of the settlement, Texcal will issue a cash call for roughly US$300,000 from Cue to conduct exportation activities in PB-2.

Furthermore, Cue will pay US$380,000 to the joint venture partners, which it will tap into its existing cash reserves of US$111,000. The remaining amount will be paid from the company's share of the PSC performance bond.

Both payments are due to be finalised at the end of this month.

What is the status of both wells?

Since the resolved dispute, Cue revealed that the PB-1 well is producing around 600 barrels of oil per day. The oil is refined and exported through existing third-party facilities.

In regards to PB-2, Cue noted that is it working to bring the well into production with 3 further drills planned. Its anticipated that the drilling program will start sometime in the current quarter.

What did the CEO say?

Commenting on the production launch, Cue Energy CEO Matthew Boyall said:

Cue is excited to see oil production from the PB field after exploration success in late 2019. This is a rapid progression from exploration to production. The PB field will be a third revenue stream for Cue and will further strengthen our business.

The differences between the joint venture partners and Cue have now been resolved and we look forward to a fruitful partnership as production from the PB field increases and further exploration is undertaken in the Mahato PSC.

About the Cue Energy share price

The Cue share price was gaining ground through the course of last year before it lost more than 60% in December. This is when it advised the market it was abandoning the Ironbark-1 exploration well.

Its shares hit a low of 6 cents in March and reached a multi-year high of 24 cents prior to the December announcement.

The post Why the Cue Energy (ASX:CUE) share price is soaring 9% today appeared first on The Motley Fool Australia.

In afternoon trade the energy producer's shares are down 5% to $1.77.

Why is the Beach Energy share price sinking lower?

Investors have been selling the company's shares this afternoon following the release of an update on its drilling activities at the Ironbark 1 exploration well.

The Ironbark 1 well in WA-359-P is located in the North Carnarvon Basin, off the North West coast of Australia. The well was testing the Triassic Mungaroo Formation with multiple sand objectives. The reservoir has previously been explored nearby at comparably shallower depths and includes discoveries at the Gorgon, Goodwyn, and North Rankin gas condensate fields.

However, unfortunately for Beach and its joint venture partners BP Developments Australia, Cue Energy Resources Limited (ASX: CUE), and New Zealand Oil & Gas Limited (ASX: NZO), drilling at the Ironbark 1 exploration well has been unsuccessful.

According to the release, the well was drilled to a total depth of 5,618 metres measured depth, intersecting the primary target of the Mungaroo Formation at 5,275 metres. But no significant hydrocarbon shows were encountered in the target sandstones.

As a result of this, the exploration well will be plugged and abandoned, in-line with pre-drill planning.

While this is certainly a disappointment for Beach, it still has plenty of other exploration activities to cushion the blow.

The same cannot necessarily be said for Cue Energy Resources. Unsurprisingly, the Cue Energy share price has crashed 60% lower on the news.

The company's Chief Executive, Andrew Jefferies, commented on the news: "Bugger…. a very disappointing result for us all. Ironbark was a world scale prospect in a highly prospective address, and it needed drilling. We got an answer, but it was not the one we wanted."

"While the operations are not over yet, I'd like to acknowledge the Operator BP for their safe and professional operations throughout the drilling of the well, as well as our JV partners and our shareholders for their continuing support," he concluded.

The post Why Beach (ASX:BPT) and Cue Energy (ASX:CUE) shares are sinking lower appeared first on The Motley Fool Australia.