88 Energy Plc (LON:88E, ASX:88E) can become one of the largest acreage holders on Alaska’s North Slope, according to stockbroker Cenkos.

The explorer has launched an all-paper takeover bid for XCD Energy, an ASX-listed peer which also holds a position on the North Slope.

88 Energy’s unsolicited bid is worth A$7.5mln – the offer is 1.67 new 88 Energy shares per XCD share – and it already has the backing of major XCD shareholders accounting for 18.5% of the equity.

In a note following Monday’s news, Cenkos highlighted 88 Energy’s intention to create a larger player with a significant acreage position, and, described it as an attractive proposition.

READ: 88 Energy launches A$7.5mln takeover bid for XCD

“XCD holds 17 leases covering 195,373 acres over the highly prospective Nanushuk interval, on-trend with the 400-750mmboe Willow oil discovery,” noted Cenkos analyst James McCormack.

“The acreage also lies due north of the Umiat oil field, believed to contain around 1bnbbls of oil in place.

“An independent prospective resources report by ERCE identified three prospects within the Nanushuk and Torok with a mean unrisked net prospective oil resource of 1.6bnbbls, with a 32% chance of success attributed to the 622mmbbl Merlin prospect.”

Cenkos detailed XCD’s background and its own recent corporate activities, and, that prior to 88 Energy’s approach, it had begun a farm-out process to seek a partner for a high impact exploration campaign.

“As such, the XCD Energy acquisition provides an opportunity for 88 Energy to access potential near-term drilling opportunities as a prelude to a well on or near the Yukon Leases during 2022,” McCormack said.

“With the current downturn in the industry and the resulting capex deferrals, should 88/XCD Energy elect to drill a well during the 2021 winter drilling season, they should be able to carry out operations at a competitive price, which may help with attracting a farm-in partner.”

He added: “We also note the potentially encouraging results 88E recently released in relation to its initial petrophysical review of Charlie-1.

“The Torok targets remains uncertain commercially due to the possible high gas content but we understand that the evidence of oil in the system up-dip is compelling, derived from the Heavenly-1 well. The Seabee, despite only being sub-optimally intersected, also looks interesting on the basis of a potentially very large tight oil play.”