PERTH (miningweekly.com) – Drillsearch Energy takeover target Ambassador Oil & Gas has received another offer, with New York-listed Magnum Hunter on Tuesday announcing its bid for the Australian firm.

Magnum is offering Ambassador shareholders one of its own shares for every 27.8 Ambassador shares held. This implies a value of 34c a share, which is a 20% premium to the current implied value of Drillsearch’s offer and a 74% premium to the closing price of Ambassador shares on May 23.

Oil and gas junior Drillsearch in May launched its conditional off-market offer for Ambassador of one share for every 5.4 Ambassador shares.

The directors of Ambassador had previously unanimously recommended the takeover offer by Drillsearch, but on Tuesday told shareholders that it was assessing the Magnum offer.

Under the terms agreed with Drillsearch, Ambassador’s directors could change their recommendation in relation to the Drillsearch offer, while giving the junior company five business days to match any other proposal received.

Magnum chairperson and CEO Gary Evans said that the acquisition of Ambassador would increase the company’s exposure to a region in Australia where it already had a presence.

“Our decision was made based upon a combination of factors, which include geological interpretation, substantial land position, existing infrastructure, gas price and immediate exposure to international takeaway markets, as well as significant upside potential for our shareholders.”

Evans noted that by exchanging shares for Ambassador, rather than offering a cash consideration, Magnum was giving Ambassador shareholders the opportunity to retain exposure to the upside potential of the Australian company’s assets, while also gaining exposure to a US public oil and natural gas company, as well as three of the top-tier shale plays in the US.

Magnum also offered onshore production in the US, which was expected to reach 32 500 bbl/d of oil equivalent by the end of 2014.

The Magnum offer would be subject to certain terms and conditions, including a 50.1% minimum acceptance condition.

Ambassador’s share trading had been halted since the announcement of the Drillsearch offer.