for personal use only · 1/23/2008 · presentation will be achieved or prove to be correct....

23 January 2008

The Manager, Companies Australian Stock Exchange

Investor Briefing 23 January 2008

Further to this mornings announcement please find attached an investor briefing. By way of clarification the announcement earlier today stated that an AZA shareholder using the cash and share alternative would receive $0.71 in cash plus Nexus shares equal to $1.04 calculated on the basis of the Nexus share price per AZA share. It also stated that assuming a Nexus share price of $1.72, an AZA shareholder who chooses this alternative will receive $0.71 plus approximately 0.58 Nexus shares per AZA share held. The more accurate calculation of Nexus shares per AZA share held is 0.60 rather than 0.58. Further details of the ratio calculation are included on page 16 of the attached investor briefing. Yours sincerely Susan Robutti Company Secretary

Nexus Energy Limited ABN 64 058 818 278 ● 134-140 Little Lonsdale Street Melbourne Victoria 3000 Phone: +613 9660 2500 Fax: +613 9654 9303

Website: www.nexusenergy.com.au

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Nexus EnergyNexus Energy

Merger with Anzon Australia and Anzon Energy….creating a leader in the Australian oil and gas sector with significant growth potential

23 January 2008For

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Important noticeThis presentation contains certain statements which may constitute "forward-looking statements". Such statements are only predictions and are subject to inherent risks and uncertainties which could cause actual values, results, performance or achievements to differ materially from those expressed, implied or projected in any forward-looking statements.

No representation or warranty, express or implied, is made by Nexus that the material contained in this presentation will be achieved or prove to be correct. Except for statutory liability which cannot be excluded, each of Nexus, its officers, employees and advisers expressly disclaims any responsibility for the accuracy or completeness of the material contained in this presentation and excludes all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission there from. Nexus accepts no responsibility to update any person regarding any inaccuracy, omission or change in information in this presentation or any other information made available to a person nor any obligation to furnish the person with any further information. F

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HighlightsHighlights

Agreed merger with Anzon Australia Limited (“AZA”) and Anzon Energy Limited (“AEL”)

Unique opportunity to create a leading $1.5bn(a) ASX listed mid-cap energy company with significant re-rating potential and emerging international relevance

Highly complementary operations – significant operational synergies in the Gippslandbasin

Excellent mix of production growth and substantial reserves base

Offer is unanimously recommended by the Boards of AZA and AEL which have withdrawn support for the competing ARC Energy Limited (“ARQ”) proposal

Delivers substantial certain value to AZA, AEL and Nexus shareholders

Proposal to be implemented via schemes of arrangement(a) Enterprise valuation

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Key synergiesKey synergies

Shared infrastructure in the Gippsland BasinSignificant cost savings from combined operatorship of BMG and LongtomReduction of commercial risk in the event of successful exploration of prospects around BMGCombined entity to utilise Nexus’ extensive experience in operating offshore projects

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Section 1Section 1

Profile of the merged entity

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Exceptional portfolio of high quality assetsExceptional portfolio of high quality assets

Basker-Manta 5 kbd(net) oil

Current production

Near term development

Longtom gas and condensate projectBMG expanded gas, condensate and LPG projectCrux Liquids Project

Medium term development Exploration

Echuca Shoals prospect off North West AustraliaChimaera and Gummy in the GippslandBasin

Crux near field potentialBMG and Longtom near field explorationVlaming Sub BasinGippslandBasinCanterbury BasinF

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The expanded NexusThe expanded Nexus

A leading $1.5bn(a) ASX listed mid-cap energy company with significant re-rating potentialCombined 2P reserves and contingent resources of 169 mmboe place it ahead of all mid-cap oil & gas producersUnique profile of immediate production and substantial longer term growth projectsWell placed for subsequent consolidationSynergistic asset positions in the Gippsland Basin – shared infrastructureLarge potential for further upside particularly in Browse LNG and Vic/P49 exploration and fast development of discoveriesA commercially and technically capable team ready to progress outside AustraliaImproved stock liquidity with greater institutional investor interest and wider top-tier analyst coverageGreater financial flexibility

(a) Enterprise valuation

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8

5 kbd

17 kbd

39 kbd

57 kbd 56 kbd

50 kbd

45 kbd

-

5

10

15

20

25

30

35

40

45

50

55

60

65

2008 2009 2010 2011 2012 2013 2014

Dai

ly p

rodu

ctio

n (k

bd)

NXS Gas NXS Condensate AZA Oil AZA Gas AZA Condensate

Unique growth production profileUnique growth production profile

Forecast daily production (kbd)(a)(b)

(a) Average daily production per calendar year(b) 2008 production pro-forma for the full calendar yearSource: Nexus forecasts

2P Reserves + cont resources (mmboe)

Total: 169 mmboe

Basker

Longtom

CruxLongtom

72 mmboe

Crux56

mmboe

BMG40

mmboe

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A highly complementary suite of assetsA highly complementary suite of assets

NexusMelbourne

Office

NexusDarwinOffice

Nexus Perth Office

LongtomPermit: VIC/L29Interest: 100%Reserves and resourcesGas: 450bcfCondensate: 5.2mmbbl

Permit: NT/P66Interest: 100%Unrisked resourcesGas: 1,000bcfCondensate: n/a

Permit: VIC/P49Interest: Nexus 80%

Anzon 20%Unrisked resources Oil: 22mmbblGas: n/aCondensate: n/a



Permit: VIC/P54Interest: 37.5%Unrisked resources Gas: 180bcfCondensate: n/a

MantaPermit: VIC/L26Interest: 40%Reserves and resourcesOil: 3.9mmbblGas: 112.4bcfCondensate: 3.3mmbbl

GummyPermit: VIC/RL9Interest: 40%Reserves and resourcesOil: n/aGas: 67.6bcfCondensate: 2.1mmbbl

BaskerPermit: VIC/RL10Interest: 40%Reserves and resourcesOil: 35.3mmbblGas: 138.7bcfCondensate: 3.5mmbbl

NexusAZAShared

AnzonSydneyOffice

Permit: AC/P41Interest: 50%Unrisked resourcesGas: 500bcfCondensate: 19mmbbl

CruxPermit: AC/P23Interest: 85%ReservesGas: n/aCondensate: 66.3 mmbbl

Echuca ShoalsPermit: WA-377-PInterest: 66%Unrisked resources Gas: 4,000bcfCondensate: ?

Permit: WA-368-PInterest: 50%Unrisked resourcesOil: 90mmbblGas: n/aCondensate: n/a

NexusMelbourne

Office

NexusDarwinOffice

Nexus Perth Office

LongtomPermit: VIC/L29Interest: 100%Reserves and resourcesGas: 450bcfCondensate: 5.2mmbbl

Permit: NT/P66Interest: 100%Unrisked resourcesGas: 1,000bcfCondensate: n/a





Permit: VIC/P54Interest: 37.5%Unrisked resources Gas: 180bcfCondensate: n/a

MantaPermit: VIC/L26Interest: 40%Reserves and resourcesOil: 3.9mmbblGas: 112.4bcfCondensate: 3.3mmbbl

GummyPermit: VIC/RL9Interest: 40%Reserves and resourcesOil: n/aGas: 67.6bcfCondensate: 2.1mmbbl

BaskerPermit: VIC/RL10Interest: 40%Reserves and resourcesOil: 35.3mmbblGas: 138.7bcfCondensate: 3.5mmbbl

NexusAZAShared

NexusAZAShared

AnzonSydneyOffice

Permit: AC/P41Interest: 50%Unrisked resourcesGas: 500bcfCondensate: 19mmbbl

CruxPermit: AC/P23Interest: 85%ReservesGas: n/aCondensate: 66.3 mmbbl

Echuca ShoalsPermit: WA-377-PInterest: 66%Unrisked resources Gas: 4,000bcfCondensate: ?

Permit: WA-368-PInterest: 50%Unrisked resourcesOil: 90mmbblGas: n/aCondensate: n/a

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Significant operational synergiesSignificant operational synergies

Nexus estimates that $100m+ (NPV) of operational synergies may be realisedPotential synergies include:

Shared infrastructure

■ Longtom infrastructure used to process BMG gas■ Expected to accelerate BMG production and lower processing costs

Operator synergies

■ The merged entity will be the operator for both BMG and Longtom■ Significant cost synergies are expected through combining these roles

Gas portfolio

■ Combined assets will represent a gas portfolio of in excess of 0.8tcf in a well developed gas market where many recognise the potential for significant gas price increases

Exploration■ Significant acreage positions in Gippsland, Browse, Bonaparte, Perth and Canterbury Basins■ Merger reduces commercial risk in the event of successful exploration of prospects around BMG

– accelerates and de-risks key developments

Greater access to offshore

skills, experience and relationships

■ Nexus will become a significant offshore operator■ Nexus has already built up the skill base required to develop and operate offshore projects■ The merged entity will have greater scale in this area to further attract key skills and

relationships

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Leading industry positionLeading industry position

Enterprise Value (A$b)(a)

(a) Based on 20 trading day VWAPs as at 22 January 2008Source: Bloomberg, broker research

10.3

4.6

1.6 1.5 1.51.0 1.0 0.7 0.6 0.4 0.3 0.2 0.2 0.2 0.1

0

1

2

3

4

5

6

7

8

9

10

11

12

40

Woo

dside

Santos

Oil Sea

rch

AWE

Nexus

/ AZA

Beach

Roc O

il

Nexus

AED

Anzon

ARC

Horizo

n

TAPAmad

eus

Petsec

Mosaic

Ent

erpr

ise

Val

ue (A

$b)

35.0

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Significant reserves position for combined entitySignificant reserves position for combined entity

(a) Based on 20 trading day VWAP to 22 January 2008(b) Nexus / AZA EV shown prior to potential re-rate(c) BMG uncontracted reserves included in 2P reservesSource: IRESS, company filings

EV against EV / 2P (a)(b)

MergeCo

AED

Anzon(c)

ARC Energy AWE

Beach(c)

Horizon

Mosaic

Nexus

Oil Search

Roc Oil

TAP

Amadeus

Petsec

0x

5x

10x

15x

20x

25x

30x

35x

40x

60x

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

EV (A$m)

EV

/ 2P

(A$

/ boe

)

MergeCo at 15x

MergeCo at 22x

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29.428.2

23.2

18.316.9

12.7 12.5

7.3

4.4 4.2 3.9n/a

0

5

10

15

20

25

30

35

Beach OilSearch

AED AWE Nexus /AZA

Nexus Roc Oil ARC Petsec AZA TAP Amadeus

Pro

duct

ion

(kbo

epd)

Increase in production shows potential for re-ratingIncrease in production shows potential for re-rating

(a) Calendar year ending 31 December 2009

Source: Nexus internal forecasts., AZA internal forecasts, broker forecasts

2009 production rates vs peers (kboepd)(a)

Combined entity 2011 production increases to 57 kboepd

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Section 2Section 2

Summary of merger terms

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Nexus’ offer for AZANexus’ offer for AZA

Merger values AZA at $1.75(a) per share 36% premium to ARQ’s implied offer price (based on last closing price(b)) of $1.2929% premium to AZA’s last closing price(b) of $1.36

In addition AZA shareholders to receive a special dividend of $0.07 per AZA shareSignificant cash component to offer, providing value certainty to AZA and high leverage to growth for Nexus shareholders

Cash of $0.71 per AZA shareNexus shares to the value of $1.04 per AZA share

AZA shareholders will be able to select, as alternatives to the cash and scrip offerAll shares option - receive no cash and Nexus shares to the value of $1.75 per AZA shareMaximum cash option – potential to further increase the cash component of the offer, subject to a maximum cash pool of $75m available to the 27% minority shareholders

(a) Assuming a 20 trading day VWAP of between $1.50 and $2.05 (subject to rounding). The number of Nexus shares to be issued will not be fewer than 0.51 or more than 0.69 per AZA share

(b) As at 22 January 2008

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Greater certainty and upside via cap and collarGreater certainty and upside via cap and collar

AZA shareholders to receive $1.04 per AZA share in Nexus scrip if Nexus’ 20 trading day VWAP is between $1.50 and $2.05 immediately prior to Scheme meetingFixed ratio below $1.50 and above $2.05

160.7

160.7

191.5

219.6

219.6

Nexus shares to be issued

(m)

Illustrative cap and floor offer consideration mechanism

$1.88=$0.71+$1.17=0.51X$2.30

$1.75=$0.71+$1.04=0.51X$2.05

$1.75=$0.71+$1.04=0.60X$1.72

$1.75=$0.71+$1.04=0.69X$1.50

$1.61=$0.71+$0.90=0.69X$1.30

NXS shares per AZA share(a)(b)

Value of Nexus’ offer(b)

Cash component

Share component

NXS share price

(a) The number of shares to be issued will be calculated as $1.04 divided by the Volume Weighted Average Price (“VWAP”) of Nexus shares in the 20 trading days immediately prior to the Scheme Meeting as long as the Nexus VWAP is between $1.50 and $2.05

(b) Subject to rounding

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Nexus’ offer for AELNexus’ offer for AEL

As AEL’s only material asset is its 53% holding in AZA, the offer price for AEL will be determined by reference to the implied value of the AZA stake adjusted for net cash on AEL’s balance sheet Merger values AEL at $2.84(a) per shareAEL shareholders also receive significant cash under the Nexus offer

Cash of $1.16 per AEL shareNexus shares to the value of $1.68 per AEL share

The same elections are available to AEL shareholders for all-scrip / maximum cash subject to a maximum cash pool of $150m(b)

(a) Assuming a Nexus 20 trading day VWAP of between $1.50 and $2.05 (subject to rounding), the number of Nexus shares to be issued will not be fewer than 0.51 or more than 0.69 per AZA share. Assumes that the RAK unsecured note is repaid from AEL’s cash resources and that RAK and Kings Road elect to convert their respective convertible notes into AEL shares

(b) The maximum cash pool will be reduced if redemption of the convertible notes is required

i.e. same cash and scrip mix as per AZA offer

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Indicative timetableIndicative timetable

January February March April May

23 JanSign Merger

Implementation Deeds

Early MarFirst Court Hearing to approve

scheme documentation & convene Scheme meeting

Early MarScheme

documentation sent to shareholders

Late AprScheme meetings to

consider and approve scheme

Late AprSecond Court Hearing

Court approves Scheme & ASX announcement

Early MayAZA dividend paid to AZA minorities

Mar / AprVWAP period to determine number of Nexus shares

issued under scrip component

Early MayConsideration

to target shareholders

Shareholders are expected to receive consideration for their shares by early May

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Section 3Section 3

Transaction structure

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Transaction structureTransaction structure

Nexus acquires 100% of the shares in AZAAZA shareholders vote to approve – requires 75% of votes cast and 50% of shareholders votingAEL can vote 53% may be sufficient to determine outcome as Nexus will not be able to vote its 19% holding

Nexus acquires AZA via Scheme of Arrangement and issue of Nexus shares and cash

1

Nexus acquires 100% of the shares in AELAEL shareholders vote to approve – requires 75% of votes cast and 50% of shareholders votingThe AEL Board has unanimously recommended acceptance of the AEL Scheme in the absence of a superior proposal and the Independent Expert concluding that the AEL Scheme is in the best interests of AEL shareholdersAEL scheme not conditional upon AZA scheme

Nexus acquires AEL via Scheme of Arrangement and issue of Nexus shares and cash

2

Nexus will hold shares in itself this position must be unwound within 12 months by lawThe current intention is that the shares will be cancelled

Nexus cancels cross shareholdings3

Nexus

Public 27.7%

AEL 53.1%

Nexus 19.2%

Scheme ofArrangement

Nexus AEL

Nexus shares

Scheme ofArrangement

AZA

100%

Nexus

AEL

Nexus shares

AZA

100% 100%

XNexus shares

Nexus sharesX

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Section 4Section 4

Summary

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SummarySummary

Nexus / AZA / AEL merger is a uniquely compelling opportunity

Synergistic merger will lead to substantial value to be realisedfor all shareholders

Very attractive portfolio of assets

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AppendixAppendix

Business profiles

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NexusNexus

ASX 200 oil & gas exploration and development company with a market capitalisation of $730mGained its first exploration permit in the offshore Gippsland Basin in 2003 and has since accumulated nine permits in four Australian basins (Browse, Gippsland, Perth and Bonaparte)Extensive 2P reserves of 114 mmboe (60 mmstb and 350 PJ) and contingent resources of 14 mmboe (1 mmstband 85 PJ) have already been identified which complement an exciting exploration pipelineThree key projects are in appraisal and development phases: Crux, Longtom and Echuca ShoalsThe 100% owned Longtom gas project is expected to generate significant cash flows

Longtom has declared reserves of 350 PJ gas and 4 mmbbl condensateSignificant value of Crux liquids project

Current P50 Crux reserves of 66.3 mmbbl have significant upside potentialSuccessful appraisal drilling campaignFID expected mid 2008Significant near field potential

Appraisal of Echuca Shoals gas discovery is continuing with a $60m farm-in agreed with ShellRecently awarded a joint exploration permit with Shell surrounding the Crux gas field

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AZAAZA

ASX listed oil & gas producer with a market capitalisation of approximately $500mEstablished in December 2003 and has assets in the Gippsland and Canterbury BasinsKey interest is a stake in the BMG Joint Venture (Anzon 40%, Beach 40%, Itochu 20%) with current oil production of around 12,500 bopd and planned gas developmentBMG JV uses subsea wells tied back to the Crystal Ocean FPSO and shuttle tanker Basker SpiritBMG JV sold 1.4m barrels of crude oil in 1H07, generating A$120m in gross sales revenueTotal 2P resources for the BMG project of 39.2 mmstb and contingent resources of 8.9 mmstb and 379.2 PJ sales gas as at 30 June 2006AZA share of remaining BMG 2P reserves is 14.9 mmstb and contingent resources of 4.3 mmstband 152 PJ sales gasIn October 2007, AZA sold a 10% interest in BMG JV to Itochu for A$123mAZA also holds interests in the VIC/P56 (20%) and VIC/P49 (20%) permits located in the Gippsland Basin and operated by NexusF

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AELAEL

AIM listed oil & gas producer with a market capitalisation of approximately £100mEstablished in August 2001 for the purpose of developing oil and gas opportunitiesAEL’s only material asset is its 53% shareholding in AZA

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for personal use only · 1/23/2008 · presentation will be achieved or prove to be correct....

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