In a joint statement to the market, the two midcaps said they were negotiating the final terms of a proposed merger.

They requested their shares be placed in a trading halt while negotiations are finalised.

There was no word on the proposal from Nexus Energy, which owns about 16.4% of Anzon’s shares.

Anzon acknowledged it had received a “number of proposals” after opening its books last month, but said it has decided to merge with Arc on an exclusive basis.

“Merging the Basker-Manta-Gummy project with a more balanced portfolio of assets has been a stated goal of Anzon,” the company said.

Anzon, which has a market capitalisation of about $660 million, is operator and owns 40% of the BMG fields.

With a market cap of about $500 million, Arc owns and operates petroleum interests in the Perth, Canning and Bass basins, as well as overseas.

The proposal is subject to the two boards agreeing on the final terms and going ahead with a merger implementation deed.