Anzon Energy Inks Exploration Deal with RAK Petroleum

Anzon Energy

Anzon Energy Limited has signed a Memorandum of Understanding (MOU) with Ras Al Khaimah Petroleum PJSC ("RAK Petroleum"). Ras Al Khaimah is one of the seven Emirates forming the Federation of the United Arab Emirates. In addition to the MOU RAK Petroleum will be making significant financial commitments to the Anzon Group.

The MOU provides a platform for the Company to pursue international oil and gas opportunities with RAK Petroleum. Initially the particular focus will be on the Middle East where the special relationships held by RAK Petroleum will assist the rapid growth of E & P opportunities for evaluation by AEL. The intention is for the two companies to expand their interests beyond the Middle East with clearly stated objectives of building a major influential E&P group in several geographic locations. A combination of RAK Petroleum's influence and AEL's technical management expertise coupled with the financial capacity of the two organizations underpins the rapid projected growth of this new alliance.

The financial commitment by RAK Petroleum has three components as follows:

1. AEL will immediately issue 3.8 million shares at a price of GBP1.20 per share to RAK Petroleum to raise a total of GBP4.56 million. The new ordinary shares will rank pari passu with the existing ordinary shares of the Company in issue. Application will be made for the admission of these new shares to trading on the AIM Market of the London Stock Exchange plc. It is expected that such admission will take place on or before October 12, 2006.

2. Anzon Investments Limited, a wholly owned subsidiary of AEL, has issued to RAK Petroleum unsecured and unsubordinated Bonds for GBP20 million at a coupon rate of 9.25% per annum. The Bonds have a maturity period of three years.

3. Anzon Investments Limited has issued to RAK Petroleum unsecured and unsubordinated Convertible Bonds for GBP20 million. The Convertible Bonds entitle RAK Petroleum to convert their Bonds into ordinary shares of AEL at an exercise price of GBP1.45 per share (subject to adjustments). The Convertible Bonds have a coupon rate of 7.75% and may be converted before the three year term concludes. At the end of the term if they remain unconverted, they are repayable.

Millennium Finance Corporation (MFC) was the advisor to AEL for these arrangements.

The Share Issue together with the Convertible Notes (if converted) represent 15% of the current issued capital of AEL. Consequently, AEL has invited a representative of RAK Petroleum to join its Board, effective immediately (which will be the subject of a separate announcement at the appropriate time).

AEL's major asset is a 51.5% shareholding of Anzon Australia Limited (an ASX Listed company with an approximate market capital of A$500 million.). AEL has consistently stated that its intention is to maintain a significant shareholding in Anzon Australia Limited. In addition, AEL has producing assets in Indonesia.

Given AEL's financial strength, it is keen to pursue major international oil and gas opportunities. In particular, AEL will be keen to pursue the Middle East expansion opportunities which the MOU with RAK Petroleum will provide. This expansion in the Middle East, extends AEL's international reach beyond Australia and Indonesia and precedes anticipated expansion into other geographical and hydrocarbon prospective regions of the globe.