Nexus Energy Limited, Anzon Australia Limited (AZA) and Anzon Energy Limited (AEL) have declared an agreed merger which will create a leader in the Australian oil and gas sector with significant growth potential.

The Merger involves Nexus acquiring both AZA and AEL by way of separate, noninterdependent Schemes of Arrangement.

In respect of the AZA Scheme, Nexus and AZA have executed a Merger Implementation Deed ("AZA MID") to effect the merger between Nexus and AZA.

Nexus is offering A$1.751 per AZA share ("AZA Offer Price") with consideration of A$0.71 of cash and A$1.04 of Nexus scrip.2 The scrip value is based on an assumed trading range for Nexus shares of A$1.50 to A$2.053. This creates significant certainty for AZA and Nexus shareholders but retains the prospect of value upside in the event of further drilling and appraisal success by Nexus.

A meeting of AEL Shareholders is expected to be convened in late April 2008 to consider a resolution to approve the AEL Board voting in favour of the merger between AZA and Nexus and authorising AEL to elect to receive only Nexus shares under the AZA Scheme. A shareholder circular is expected to be despatched to shareholders in early March 2008 in which the Board of AEL will recommend the AZA Scheme to AEL shareholders.

The combined entity will have material positions in a pipeline of significant offshore projects including Basker Manta, Longtom and Crux, a significant forecast production profile, asset diversity (including domestic gas, oil, condensate as well as potential LNG exposure from Echuca Shoals and the Crux nearfield exploration), increased financial capability and expanded operatorship capability.

In the short term, net oil production is forecast to rise from 4,600 barrels of oil per day ("bopd") from the Basker Manta oil project in the 2008 calendar year to 16,900 barrels of oil equivalent per day ("boepd") with the commencement of production from the Longtom gas project in 2009. In the medium term, the forecast commencement of production from the Crux liquids project and the Basker Manta Gummy ("BMG") gas project is expected to increase net production rates to in excess of 57,000 boepd by 2011.

The combined entity will be managed by Ian Tchacos, Managing Director of Nexus. Under his stewardship Nexus has grown in capitalisation from A$2 million to A$730 million10. Nexus has offered a Board seat in the combined entity to a nominee of AZA / AEL.

Michael Fowler, Chairman of Nexus, said, "This merger will combine two companies with truly complementary asset positions focussing on the mature Gippsland basin and the rapidly emerging Browse basin. Significant operational synergies are available in the Gippsland basin from Longtom and Basker Manta Gummy and nearfield exploration assets. The combination of Anzon’s immediate production and Nexus’ pipeline of production and development assets will create a unique earnings profile that is characterised by substantial and Assumed net cash balance of US$7.5 million at completion of the transaction and a AUD/USD exchange rate of 0.8613 and AUD/GBP of 0.4432 (balance is estimated prior to the receipt of proceeds from the exercise of AEL options).

Tags: Anzon Energy Limited, Nexus Energy