Dart Energy Limited (ASX:DTE) And Apollo Gas (ASX:AZO) In Agreement On Takeover Offer

Brisbane, Sep 28, 2010 AEST (ABN Newswire) - Dart Energy Limited (ASX:DTE) is today pleased to announce an agreement with Apollo Gas Limited (ASX:AZO) to make a recommended offer for all issued securities in Apollo, other than those already owned by Dart.

The Offer will comprise:

- 3 Dart ordinary shares for every 4 Apollo ordinary shares; and

- 3 comparable Dart options for every 4 Apollo options.

Based on Dart's last traded price on the ASX of A$1.05 on 24 September 2010, the consideration is valued at A$0.79 per Apollo share representing:

- a 29% premium to Apollo's closing share price of A$0.61 on 24 September 2010, being the last day of trading of Apollo shares on ASX prior to this announcement; and

- a 32% premium to Apollo's 1 month Volume Weighted Average Price (VWAP) on ASX.

Based on Dart's 1 month VWAP of A$0.92 on ASX, the consideration is valued at A$0.69 per Apollo share representing:

- a 13% premium to Apollo's closing share price of A$0.61 on 24 September 2010, being the last day of trading of Apollo shares on ASX prior to this announcement; and

- a 16% premium to Apollo's 1 month VWAP on ASX.

Based on the Dart 1 month VWAP, the transaction implies an enterprise value for Apollo of approximately A$126 million (A$145 million based on the last traded price of Dart on the ASX prior to this announcement).

Dart currently has an existing 21% interest in Apollo, and is currently exercising farm-in rights with respect to two Apollo tenements.

Given Dart's current shareholding in Apollo, the consideration payable by Dart to acquire the 79% of Apollo shares that it does not already own will be approximately 118 million Dart shares. Assuming completion of the Offer, Apollo shareholders will hold approximately 22% of the combined group.

All directors of Apollo (other than Mr Stephen Bizzell, who is also a director of Dart) have already advised they intend to recommend the Offer, in the absence of a superior proposal or unless the independent expert concludes that the Offer is not reasonable.

The directors and major shareholders of Apollo who, excluding Dart's existing 21% shareholding interest, hold approximately 54% intend to accept the Offer within 14 days of the opening of the Offer period in the absence of a superior proposal.

Dart Managing Director, Simon Potter, said today that, if accepted, the Offer will create significant value for both Dart and Apollo shareholders.

Mr Potter said, "The acquisition of Apollo is a logical move for Dart and is consistent with our Australian strategy laid out at the time of the demerger of Dart from Arrow Energy - to 'grow big, grow fast'. We see in Apollo a differentiated NSW focused strategy, with extensive gas resources capable of near term commercialisation, with access to an ever increasing gas market advantaged in terms of its greener credentials, pricing and infrastructure. Importantly, Apollo's resource may benefit from gas-to-LNG projects, but is not dependent on them. A combination of Dart's ambition, technical and operational expertise with Apollo's assets will drive further upside from within this portfolio."

Offer Rationale and Benefits to Apollo Shareholders

Dart is focused on becoming the leading global Coal Bed Methane (CBM) company, is well funded, with a globally diversified portfolio of quality assets in Australia, China, Indonesia, India and Vietnam and has recently expanded its geography by establishing a European foothold through acquiring an equity stake in Composite Energy. Its strategy is focused on acquiring significant resource positions capable of early commercialization in close proximity to high growth gas markets exhibiting strong upside in both demand and pricing.

By accepting Dart's Offer, Apollo shareholders will receive a substantial premium for their shares and will retain their exposure to CBM through a more sizeable, geographically diverse company with:

- multiple projects in various stages of exploration and appraisal;

- greater scale, improved access to funding and greater market liquidity;

- an experienced management team with proven project development skills;

- a strengthened project pipeline supported by quality global partners; and

- cash reserves to fund continued growth.

Capital gains tax rollover relief is expected to be available for Apollo shareholders who are Australian residents in respect of the Dart shares that they receive under the Offer, subject to Dart acquiring 80% or more of Apollo.
"By accepting the Offer, Apollo shareholders will have the opportunity to diversify their interests beyond a suite of NSW only assets, into Dart's quality international projects, and become part of the world's first global CBM business," said Mr Potter.

The acquisition of Apollo provides Dart with control and ownership of the two existing Apollo projects in respect of which Dart is currently exercising farm-in rights, in addition to other Apollo licences, and will enable Dart's technical expertise and development capabilities to be brought to bear across the Apollo portfolio.

The acquisition of Apollo will create value for Dart shareholders by:

- furthering the execution of Dart's growth strategy consistent with accessing opportunities in advantaged markets;

- building scale, critical mass and momentum in its Australian business by expanding its interests in NSW to exceed 23,000 km2;

- delivering near-term potential for substantial 3P reserves growth, as well as further exposure to shale gas, conventional gas options and other forms of energy such as geothermal;

- consolidating existing farm-in agreements and shareholdings in Apollo whilst being able to apply more directly Dart's technical expertise to leverage the portfolio and deliver early commercialisation options;

- using existing cash to fund ongoing operations and thereby preserving the near-term cash balance of the Dart business; and

- providing significantly more optionality in dealing with other NSW CBM operators, local and government authorities.

"Dart's acquisition of Apollo is a win-win for both Dart and Apollo shareholders. By leveraging its existing shareholding from seeding Apollo prior to its initial public offering, Dart is able to offer a substantial premium to Apollo shareholders", Mr Potter said.

The expanded portfolio further leverages Dart's ambition to become the world's first global CBM company by close to doubling Dart's overall acreage holding and increasing the number of licenses by 50% (excluding Composite).

Key Offer Conditions

The Offer will be subject to certain conditions which will be set out in the Bidder's Statement that will accompany the Offer. Key conditions of the Offer will include:

- 90% minimum acceptance;

- no prescribed occurrences relating to Apollo;

- no material adverse change in Apollo's business or assets;

- no restraining orders;

- no material acquisitions, disposals or new commitments by Apollo;

- no persons exercising rights under certain agreements or instruments which have a material impact on Apollo (except as disclosed to Dart);

- no exercise of certain rights of any person to acquire or dispose of a material asset of Apollo or terminate any material contract (except as disclosed to Dart);

- no distributions;

- S&P/ASX 200 not closing below 3,931 on any three consecutive trading days; and

- all material approvals and authorisations of Apollo remain in force during the offer period.

Takeover Implementation Agreement

Dart and Apollo have entered into a Takeover Implementation Agreement which contains standard no-shop and no-talk provisions and a break fee which is payable by both Dart and Apollo in certain circumstances. A copy of the Takeover Implementation Agreement is attached in the schedule to this announcement.

Indicative Offer Timing

Dart is preparing a Bidder's Statement which will be lodged with the Australian Securities and Investments Commission and sent to Apollo's securityholders in accordance with the timetable and Key Milestones below.

Key Milestone Dates

- Takeover Bid Implementation Agreement executed on 28 September 2010

- Offer jointly announced on 28 September 2010

- Dart lodges Bidder's Statement with ASIC and serves on Apollo and ASIC on 25 October 2010

- Bidder's Statement dispatched to Apollo securityholders on 1 November 2010

- Target's Statement lodged with ASIC and dispatched to Apollo securityholders on 9 November 2010

- Offer Period ends (subject to extension) on 2 December 2010

For the complete Dart Energy announcement, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/63834-ASX-DTE-224323.pdf

Contact

Mr Simon Potter Chief Executive Officer Tel: +65-6508-9840 Mr Shaun Scott Executive Director and acting CFO Tel: +61-7-3149-2100 Mr Eytan Uliel Chief Commercial Officer Tel: +65-6508-9840 http://www.dartenergy.com.au