Global Processing

Arrow Bows to $3.1 Billion Bid from Shell, Petrochina

March 22, 2010
Reuters reports that Australia''s Arrow Energy Ltd has agreed to a fresh takeover offer from Royal Dutch Shell and PetroChina to A$3.4 billion ($3.1 billion) for most of its Australian assets. The new bid, which would give China its first stake in Australia''s burgeoning coal-seam gas industry, followed two weeks of talks after Shell and PetroChina made an offer that investors considered too low. The takeover needs approval from Australia''s Foreign Investment Review Board, which is likely to study it closely after regulators said they wanted to cap state-owned companies'' stakes in Australia''s top resource firms to 15 percent. Shell and PetroChina are now offering A$4.70 a share in cash for Arrow''s Australian assets plus one share in a new listed company to be called Dart Energy, which will house its Asian exploration assets and some Australian assets, Arrow said. The bid is pitched at a 35 percent premium to Arrow''s last trade ahead of March 8, when the first offer of A$4.45 a share for the Australian assets was announced. Coal seam gas, or natural gas trapped in coal beds, has attracted global energy companies to Australia looking to export supplies to energy-hungry Asian countries, like China. Shell is looking to use Arrow''s coal seam gas to supply a planned liquefied natural gas (LNG) plant in Queensland, having lined up PetroChina to buy the gas. Shell''s LNG project will be competing against three other LNG projects in Queensland involving BG Group, ConocoPhillips, and Malaysia''s Petronas. Dart Energy will hold Arrow''s international coal seam gas exploration assets in China, Indonesia, India and Vietnam as well as its stakes in BOW Energy, Apollo Gas and LNG Ltd. Shell will continue to hold its 10 percent stake in the international assets.