11:18am this was reported, page-2

Reuters, with a staff reporter

Oil and gas producer Australian Worldwide Exploration Ltd (AWE) plans to buy oil firm Arc Energy Ltd for $508 million in a cash and share deal, a source familiar with negotiations says.

"It's a cash and share deal which will value Arc at about $1.58 a share," said the source, who declined to be identified because he was not authorised to speak on the matter.

Shares in the petroluem were placed in a trading halt, pending an announcement regarding a proposed joint transaction.

AWE gave no details of the planned deal in a brief statement to the Australian stock exchange.

Oil minnow Arc Energy said on April 14 it was in talks with AWE about a possible takeover bid by AWE.

Shares in Arc have surged 45 per cent since the announcement to close at $1.54 on Wednesday, while shares in AWE closed 3.3 per cent higher at $3.78.

AWE's proposed acquisition comes on the heels of a flurry of corporate activity in recent months, with junior oil and gas firms seeking mergers to boost production profiles amid rocketing oil prices, which struck an all-time high of $US119.90 on Tuesday.

A merger between the two companies would give AWE more exposure to two projects in western and southern Australia in which both companies have stakes.

AWE, which has a market value of about $1.7 billion, has production assets in Australia, New Zealand and Argentina. It produced four million barrels of oil equivalent in 2007.

In February, AWE said a strong increase in revenue and cashflow on the back of robust production rates had left the company with a strong balance sheet and zero debt.

It had cash reserves of $97.5 million as of December 31, 2007.

Arc Energy has production assets in the Perth Basin off Western Australia and in the Bass Basin off Victoria. It also holds exploration licences on the onshore Canning Basin of Australia's north-west.

Arc Energy lost out in an attempt to mid-sized producer Nexus Energy Ltd buy oil producer Anzon Australia Ltd earlier this year.


http://www.businessspectator.com.au/bs.nsf/Article/ARC-AWE-in-trading-halt-DZ27K?OpenDocument