88 Energy Limited (ASX: 88E; AIM: 88E) ("88 Energy"), is pleased to announce its intention to make an off-market takeover offer to acquire all of the fully paid ordinary shares and listed options on issue in XCD Energy Limited (ASX: XCD) ("XCD Energy"), an oil exploration company with operations on the North Slope of Alaska, USA.

Highlights

· 88 Energy's Offer is:

-  1.67 new 88 Energy shares for every XCD Energy share held ("Share Offer"); and

-  0.5 new 88 Energy shares for every XCD Energy listed option held ("Option Offer"),

(together, "the ProposedOffers").

· Share Offer values the XCD Energy shares at 1.0 cent each1, representing a:

-  100% premium to the closing price of XCD Energy shares on ASX on 24 April 2020 of 0.5 cents;

-  120% premium to the 10-day VWAP of XCD Energy shares2;

-  102% premium to 30-day VWAP of XCD Energy shares2;

-  36% premium to 60-day VWAP of XCD Energy shares2; and

-  a value equal to XCD Energy's placement in October 2019 which was undertaken at 1.0 cent per share.

· Option Offer values the XCD Energy listed options at 0.3 cents each3, representing an:

-  85% premium to the VWAP of all trades completed on ASX since the options were listed (XCDOA) on 25 February 2020.

· The merger creates an Alaska focused oil explorer with:

-  a diversified portfolio of 3 key project areas; Project Icewine, Yukon Leases and Project Peregrine at various stages of project maturity;

-  Board, management and technical team with proven operational capability and a track record for delivering on project objectives, together with access to an extensive network of global and Alaskan relationships - both business and technical; and

-  Increased scale, market presence, funding capability and share trading liquidity across ASX and AIM.

· XCD securityholders will hold up to 15% of the combined group, thereby:

-  retaining exposure to the potential future upside of the Brookian oil plays across both sets of assets;

-  mitigating and diversifying exploration risk whilst gaining exposure to 88 Energy's assets, balance sheet and farm-out expertise; and

-  benefiting from the combined group's strong exploration and operating expertise, enhanced financial strength and the ability to optimise exploration activity across an enlarged portfolio.

· Major XCD Energy shareholders have entered into pre-bid acceptance agreements with 88 Energy in respect of 18.5% of shares on issue and 6.8% of listed options on issue.

1.  Based on the 10-day volume weighted average price (VWAP) of 88 Energy shares on ASX of 0.6 cents up to and including 24 April 2020. The implied value of the Share Offer will change with fluctuations in the 88 Energy share price.

2.  VWAP of XCD Energy shares is calculated for the period up to the close of trading on the ASX on 24 April 2020.

3.  Based on the 10-day volume weighted average price (VWAP) of 88 Energy shares on ASX of 0.6 cents up to and including 24 April 2020. The implied value of the Option Offer will change with fluctuations in the 88 Energy share price.

Introduction

88 Energy is an Australian-based oil and gas exploration/appraisal company targeting oil on the North Slope of Alaska. 88 Energy's main project is Project Icewine, which comprises approximately 480,000 contiguous acres onshore Alaska in prolific oil-rich provinces.

XCD Energy is an ASX-listed public company, with a focus on exploration in the USA with a 100% working interest in 195,373 acres on the highly prospective North Slope of Alaska.

Constructive discussions took place between 88E and XCD directors over the weekend; however, the short timeframe prevented execution of a bid implementation deed. We look forward to continued discussions in anticipation of an agreement, including securing a recommendation from the XCD directors; however, there is no guarantee that this will occur.

Compelling Offer for XCD Shareholder and Listed Optionholders

88 Energy has, today, announced its intention to make an off-market takeover offer ("Offer") to acquire all of the fully paid ordinary shares and listed options on issue in XCD Energy under the Corporations Act 2001 (Cth) (the "Corporations Act").

Under the Offer, XCD Energy securityholders will receive:

· 1.67 new 88 Energy shares for every XCD Energy share held ("Share Offer"); and

· 0.5 new 88 Energy shares for every XCD Energy listed option held ("Option Offer"),

(together, the "ProposedOffers").

The Share Offer values the XCD Energy shares at 1.0 cent each4, representing a:

· 100% premium to the closing price of XCD Energy shares on ASX on 24 April 2020 of 0.5 cents;

· 120% premium to the 10-day VWAP of XCD Energy shares 5 ;

· 102% premium to 30-day VWAP of XCD Energy shares5;

· 36% premium to 60-day VWAP of XCD Energy shares5; and

· a value equal to XCD Energy's placement announced in October 2019 which was undertaken at 1.0 cent per share and included a 1 for 2 free attaching option exercisable at 2 cents per option6.

4.  Based on the 10-day volume weighted average price (VWAP) of 88 Energy shares on ASX of 0.6 cents up to and including 24 April 2020. The implied value of the Share Offer will change with fluctuations in the 88 Energy share price.

5.  VWAP of XCD Energy shares is calculated for the period up to the close of trading on the ASX on 24 April 2020.

6.  Placement was announced on 23 October 2019 and shares were issued in November 2019 (Tranche 1) and December 2019 (Tranche 2).

The Option Offer values the listed XCD Energy options at 0.3 cents each7, representing an 85% premium to the VWAP of all trades completed on ASX since the options were listed (XCDOA) on 25 February 2020.

The Option Offer provides an opportunity to realise value for the XCD Energy Options in circumstances where there is otherwise an illiquid market for them. The chart below displays the trading volume and daily VWAP since listing on 25 February 2020 vs the implied Option Offer Price.

The Proposed Offers value the equity of XCD Energy at approximately A$7.5 million and deliver a substantial premium to XCD Energy Shareholders and Optionholders, who will retain a ~15% ownership and participation in the future performance of the combined group.

7.  Based on the 10-day volume weighted average price (VWAP) of 88 Energy shares on ASX of 0.6 cents up to and including 24 April 2020. The implied value of the Option Offer will change with fluctuations in the 88 Energy share price.

Strategic Rationale for the Transaction

The transaction creates an Alaska-focused oil exploration and appraisal company with a diversified portfolio of three highly prospective project areas: Project Icewine, Yukon Leases and Project Peregrine and provides an attractive investment proposition for existing and new shareholders.

Key benefits of the transaction include:

· the creation of an established oil exploration and appraisal company with an attractive and complementary portfolio of exploration assets - at various stages of project maturity;

· enhanced strategic, commercial, technical and financial strength to optimise funding of operations, including an increased level of liquidity and exposure to a larger global investor base giving greater financing flexibility;

· the ability to optimise operational activity across the combined group's highly prospective exploration / appraisal portfolio with potential synergies associated with future project development and infrastructure requirements; and

· a strong board, management and technical team with a proven track record for advancing projects and delivering on milestones, including two 3D and one 2D seismic survey, drilling of four exploration wells safely  and on budget over a 5 year period as well as execution of farm-in/farm-out transactions.

88 Energy Managing Director, Mr David Wall, said the strategic merit for the combination is clear:

"In a combined company, XCD Energy shareholders and listed option holders will be able to leverage from 88 Energy's geological and operational expertise, specific to the North Slope of Alaska, where we have drilled four wells as Operator and acquired several 2D and 3D seismic surveys over the last five years. This includes extensive technical knowledge of the regionally successful Brookian oil plays, in which 88 Energy retains significant upside exposure via its highly prospective portfolio of exploration/appraisal projects covering ~250,000 net acres (480,000 gross) co-located on the North Slope."

Transaction Details

The Proposed Offers are subject to only a limited number of conditions, including a 90% minimum acceptance condition. A full list of proposed conditions for the Proposed Offers is provided in Annexure A of this announcement.

The Share Offer will extend to all XCD Energy shares which come into the bid class during the Offer period as a result of the exercise of listed or unlisted options or the conversion of performance rights held by XCD Energy executives (subject to obtaining any necessary ASIC modifications), during the Offer period. An Option Offer will be made in respect of the XCD Energy listed options currently on issue.

Further details regarding the Proposed Offers will be contained in the Bidder's Statement, which will be sent to XCD Energy securityholders. 88 Energy currently expects the Bidder's Statement to be dispatched to XCD Energy securityholders by the middle of May 2020.

Independent Board Committee

The 88 Energy board of directors has established an independent board committee to consider, amongst other things, the terms of the Potential Offers and the application of ASX Listing Rule 10.1 and Chapter 2E of the Corporations Act to the Offer ("Independent Board Committee"). The Independent Board Committee is comprised of each of the directors of 88 Energy, other than David Wall, the Managing Director, who currently holds 29,395,798 XCD Energy shares and 2,500,000 XCD Energy listed options.

The Independent Board Committee has independently assessed Mr Wall's personal interest in XCD Energy and has determined that Listing Rule 10.1 does not apply to the transaction because Mr Wall's XCD Energy shares and listed options do not have sufficient value for them to be classified as a "substantial asset" for the purposes of Listing Rule 10.1.

Additionally, the Independent Board Committee has also determined that Chapter 2E of the Corporations Act does not apply because Mr Wall will receive the same consideration as all other XCD Energy shareholders and listed option holders.

The Independent Board Committee approved the bid consideration payable under the Proposed Offers based on its own determination on the relative values of 88 Energy shares, and XCD Energy shares and listed options, having taken advice from 88 Energy's corporate adviser.

Michael Evans (through his controlled entities, Tevlo Pty Ltd and Tour Holdings Pty Ltd) holds 4,000,000 shares in XCD Energy.  The Independent Board Committee formed the view (and Michael Evans confirmed) that this holding was not significant enough to constitute a material personal interest under the Corporations Act and therefore did not preclude Mr Evans from being a member of the Independent Board Committee.

Owing to Mr Wall's and Mr Evans' interests in XCD Energy shares and XCD Energy listed options, as detailed above, the Proposed Offers and the Pre-Bid Acceptance Deeds (as set out below) represent related party transactions pursuant to the AIM Rules for Companies. Accordingly, Steve Staley, the remaining independent director of 88 Energy, having consulted with the Company's nominated adviser, Cenkos Securities plc, considers that the terms of the Proposed Offers and the Pre-Bid Acceptance Deeds are fair and reasonable insofar as the Company's shareholders are concerned.

Pre-Bid Acceptance Deeds

88 Energy has entered into pre bid acceptance deeds with major XCD Energy shareholders and listed option holders listed in Annexure B (together, the "Shareholders"), in respect of 18.5% of the XCD Energy shares and 6.8% of the XCD Energy listed options on issue. Pursuant to these deeds, the Shareholders have undertaken to accept the Proposed Offers, in the absence of a superior proposal.

Advisers

88 Energy is being advised by Longreach Capital as corporate adviser and Steinepreis Paganin as the legal adviser in relation to the Proposed Offers.

Forward Looking Statements and Disclaimers

This announcement is for information purposes only and does not constitute a prospectus or prospectus equivalent document. It is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase or otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, nor shall there be any offer, sale, issuance or transfer of securities in any jurisdiction in contravention of any applicable law.

This announcement contains forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "forecast", "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions.

The forward-looking statements in this announcement are based on current expectations, estimates, forecasts and projections about 88 Energy and XCD Energy and the industry in which they operate. They do, however, relate to future matters and are subject to various inherent risks and uncertainties. Actual events or results may differ materially from the events or results expressed or implied by any forward-looking statements. The past performance of 88 Energy or XCD Energy is no guarantee of future performance.

None of 88 Energy, XCD Energy, or any of their directors, officers, employees, agents or contractors makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law.

You are cautioned not to place undue reliance on any forward-looking statement. The forward-looking statements in this announcement reflect views held only as at the date of this announcement.

This announcement has been authorised by the Board.