Drillsearch Energy's shareholders have overwhelmingly approved its plan to merge with rival oil and gas producer Beach Energy.
Nearly 94 per cent of Drillsearch shareholders voted in favour of the merger proposal at a court-ordered shareholder meeting in Sydney on Wednesday, the company said. Beach Energy is not required to seek shareholder approval for the plan.
Drillsearch's largest shareholder, Australian billionaire Kerry Stokes, also holds a nearly 20 per cent stake in Beach Energy.
"The focus of both companies is to press ahead with implementation of the proposed merger and to successfully integrate the two businesses to drive value from the combination," Drillsearch chairman Jim McKerlie said.
The two Cooper Basin-focused exploration companies announced their merger plan in October, to create a larger energy company that could better navigate the sector downturn. Under the plan, Drillsearch shareholders will receive 1.25 Beach shares for every Drillsearch share they hold.
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Earlier this month, Beach Energy announced its second major writedown in the last six months, saying it would take impairment charges of up to $650 million in its half year accounts.
Drillsearch, which reported a sharp decline in its September quarter revenue, also said this month it would need to review the carrying value of its assets, following the plunge in oil prices and weakening market sentiment.
A court hearing to seek approval for the merger is scheduled for February 18, with the deal likely to be implemented by March.
