Ambassador shareholders will be offered one Drillsearch share for every 5.4 Ambassador shares, implying a value of 29.3c per Ambassador share based on Drillsearch's closing price of $1.58 yesterday.

As a result of this offer, Drillsearch would issue about 26.3 million shares in order to acquire 100% of Ambassador, resulting in Ambassador shareholders owning 5.7% of Drillsearch.

The directors of Ambassador have unanimously recommended the takeover in the absence of a superior offer, with several major shareholders in the company announcing they will vote in favour.

Drillsearch has entered into acquisition agreements with those major shareholders, under which it would assume 19.9% of Ambassador at the offered rate.

Fotoula Hatziladas and Eye Investment Fund, who collectively own 17.6% of Ambassador, have advised they intend to accept the offer within two weeks from opening.

Motivating the take-over is the prospect of consolidating Drillsearch's dominant position in the Northern Cooper wet gas area through combining Ambassador's 47.5% non-operated interest in PEL 570 with Drillsearch's 80% owned and operated interest in the adjacent PEL 101.

Upon first entering the area through an acquisition of Acer Energy, Drillsearch conducted a 413sq.km 3D seismic survey over PEL 101, PEL182 and PEL 570.

The company considers the broader Northern Cooper wet gas project area is analogous to the Greater Tindilpie complex in the southern Patchawarra Trough, which is being developed by a Santos-operated joint venture.

According to both companies, Ambassador shareholders will benefit from the takeover deal through exposure to a balanced Cooper Basin portfolio anticipated to hit record production of 3-3.3 million barrels this financial year.

"The offer represents a compelling opportunity for all Ambassador shareholders to capture a premium for their shareholding, retain exposure to Ambassador's key asset, and to become part of a profitable mid-tier oil and gas producer," Ambassador chairman David Shaw said.

"The directors have unanimously resolved to recommend that shareholders accept the offer, in the absence of a superior proposal."