arc wins race for anzon oil gas

ARC wins race for for Anzon oil, gas

Nigel Wilson ,Energy writer

October 23, 2007

ERIC Streitberg's ARC Energy has won the tender for Anzon Australia and rocketed to the third tier of listed oil and gas companies, with a combined market capitalisation of more than $1.1 billion.

ARC and Anzon yesterday announced they were negotiating the final terms of a proposed merger - the outcome of a tender process begun by Anzon earlier this year.

They requested a trading halt in the shares of both companies.

ARC is understood to have beaten off proposals by Santos, Origin Energy and Australian Worldwide Exploration - all eager to pick up Anzon' key asset.

Anzon is a 40 per cent stakeholder and operates the Basker-Manta-Gummy oil and gas project in Bass Strait in a joint venture with Beach Petroleum (40 per cent) and the Japanese giant trading house Itochu, which earlier this year paid $226 million for a 20 per cent stake.

ARC is an equity partner in the BassGas project based on the Yolla gas field, also in Bass Strait, and has equity in the Cliff Head oilfield near Dongara in Western Australia, both of which were acquired earlier this year when ARC bought the Mitsui offshoot Wandoo Petroleum.

ARC is currently undertaking an extensive exploration program in WA's onshore Canning basin underpinned by a $40 million investment by Alcoa.

ARC and Anzon expect to release details of their merger to the market tomorrow, but progress may depend on Anzon rival Nexus Energy.

Nexus has proposed a merger with Anzon, but was excluded from the tender process, and Anzon's data room, after it was revealed that Nexus' major shareholder, Norwegian company Viking Shipping, was buying Anzon shares.

"We've been disciplined in seeking a way forward for Anzon Australia by a tender process, but Nexus never did submit a tender proposal or sign a confidentiality agreement," Anzon founder and chief executive Steve Koroknay said.

"We could not let them into the data room in all honesty to the other tenderers and while Viking was buying our shares."

Anzon Australia is owned 53 per cent by London Alternative Investment Market-listed Anzon Energy.

But Anzon Energy had not been prepared to provide funding or dilute its stake, as Anzon Australia sought to move away from being a single project investor, a situation Mr Koroknay said financiers regarded as a negative.

Last year, Anzon Australia made an acrimonious and ultimately unsuccessful $171 million all-scrip bid for Nexus Energy, which left it with a 12.4 per cent stake.

Nexus has reported that it holds 16.4 per cent of Anzon.

It was the failure of Anzon's bid for Nexus that led to preliminary discussions with ARC.