2009-08-19-2007-12-01

To merge with combined market capitalization of US$1 billion.

Arc Energy Ltd., Perth, Australia, (Australia: ARQ) plans to merge with Anzon Australia Ltd., Sydney, (Australia: ASA) a subsidiary of Anzon Energy Ltd. for approximately A$708 million (US$660 million). Arc is offering 1.175 shares per Anzon share, representing a 55% premium to the closing price of Anzon shares on Aug. 24. Anzon shareholders will hold 50% to 56% of Arc after close. The deal is valued at US$15.16 per barrel of oil equivalent of proved and probable reserves. The combined company will have a market capitalization of approximately A$1.1 billion (US$1 billion). Pro forma, Arc reserves will increase 218% to 51.1 million barrels of oil equivalent (48% gas), and production is expected to grow to 4 million barrels of oil equivalent for 2008, a 64% increase. Arc will continue to hedge approximately 30% of its production. Arc will fund the deal with cash and debt facilities from BOS International and Commonwealth Bank of Australia. Arc managing director Eric Streitberg says, "The merger builds on Arc's acquisition of the Wandoo portfolio earlier in the year and reinforces Arc's focus on developing a balanced portfolio of assets in the stable and commercially attractive Australian operating environment. We believe that the merger creates the pre-eminent Australian oil and gas midcap company, ideally positioned to maximize the value from a balanced portfolio of assets and to participate in future growth through further consideration in the sector." Anzon executive chairman Steve Koroknay says, "The financing capability of the merged company will allow for the optimal development of the BMG gas project for the benefit of all shareholders. The single asset exposure and corporate structure which has inhibited Anzon's ability to grow will be resolved with this merger." ABN Amro and Mallesons Stephen Jacques are advisors to Arc. RFC Corporate Finance and Deacons are advisors to Anzon. Macquarie Bank and Corrs Chambers Westgarth are advisors to Anzon Energy. The deal is expected to close in early February.