Junior oil explorer courted by two buyers

NOVUS Petroleum has launched an $82.6 million takeover offer for Brisbane-based Petroz in a push to gain entry into the $2.4 billion Bayu-Undan liquids project in the Timor Gap.

Yesterday's announcement of an all-scrip merger proposal sent Petroz shares surging 15.7 per cent to 48c.

It also forced Petroz to adjourn today's shareholder meeting to vote on a rival deal to give NZ's Fletcher Challenge Energy a minimum 33.7 per cent stake.

Novus has proposed a scheme of arrangement under which Petroz shareholders would receive one Novus share for every 4.5 Petroz shares held - valuing Petroz at 42c a share.

Petroz needs funds to secure its 8.25 per cent stake in Bayu-Undan, which is expected to start condensate production in 2004. The deal with Fletcher would provide the money, but so would a merger with cash-rich Novus.

Bayu-Undan received more good news yesterday, with an agreement to build an offshore gas pipeline from the field to Darwin.

Novus corporate development manager Mike Sandy said both companies would benefit.

"If the merger is implemented, Petroz shareholders will retain their exposure to Bayu-Undan, and gain access to Novus's international portfolio which generates strong levels of production and cash flow," Mr Sandy said.

Petroz said the unsolicited offer required approval from Petroz shareholders.

"The Petroz board has not had time to consider it in detail," it said.

It also announced a $1.7 million annual profit, turning around the previous year's $22.1 million loss.