March 2, 2009 / 1:13 PM / 9 years ago

UPDATE 1-Zargon Energy to buy Masters Energy for C$28.2 mln

* Zargon to also assume C$13.2 mln of debt

* Offer at a 53 pct premium over Masters’ Friday close

* Deal expected to close in April 2009

* Deal to boost Zargon’s ‘09 production to 10,200 boe/d

March 2 (Reuters)- Zargon Energy Trust ZAR_u.TO agreed to acquire Masters Energy Inc MSY.TO for about C$28.2 million ($22.08 million) in cash and stock to increase its oil production.

Masters shareholders can choose between receiving 0.12 of Zargon’s trust units or C$1.83 a share in cash, a premium of about 53 percent based on the closing price of Masters Energy’s shares on Friday.

Including the assumption of debt, the deal is valued at about C$41.4 million, the companies said in a joint statement.

About 20 percent of the total price will be paid in cash, while 80 percent will be paid in Zargon trust units, the statement said.

After the completion of the acquisition, Zargon expects its 2009 production to average 10,200 barrels of oil equivalent per day. Last month, it had forecast production of 9,300 boe/d.

Production at Zargon is expected to increase with the addition of Masters’ Little Bow property, which currently produces about 700 boe/d. Excluding this property, Masters produces an additional 320 boe/d.

FirstEnergy Capital Corp is acting as Masters’ financial adviser.

Shares of Calgary-Alberta-based Masters closed at C$1.20, while shares of Zargon closed at C$14.87 on Friday. ($1=1.277 Canadian Dollar) (Reporting by Isheeta Sanghi in Bangalore; Editing by Amitha Rajan)

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