Arrow had previously taken 1.3 million shares and 433,333 attaching options at 18 cents per share ($234,000). The exercising of both options brings Anzoil's total stake in Arrow to around 5 per cent.
"The board of Anzoil believes the Arrow farmin provides an excellent opportunity to achieve domestic gas production and consequent cashflow for the company," Anzoil told the stock exchange.
As part of the farmin agreement, Anzoil will spend up to $1.4 million funding Arrow's core hold program and a coal seam gas production program in ATP 683P in south-east Queensland.
By funding a three hole coring program up to a maximum of $400,000, Anzoil will earn the right to select a farmout area covering about a quarter of ATP 683P, in which to earn a 20% interest by completing the expenditure of a further $1 million toward the cost of the pilot production program.
Arrow will operate both the core hole program and the pilot program. Arrow has told the market it expects that the core hole program will be completed within six months and the pilot program eight months thereafter.
