Arrow Energy buys coal steam gas stake for $286 million
April 6, 2009
Australia''s Arrow Energy Ltd. will pay up to A$400 million ($286 million) for a 40 percent stake in the Tipton West field to boost its coal steam gas reserves and help it supply a planned gas export project, according to Reuters. Arrow''s move comes just weeks after it lost a A$1 billion takeover battle with Britain''s BG Group Plc for junior coal steam gas producer Pure Energy Ltd. However, Arrow booked a profit of about A$200 million from selling its 20 percent stake in Pure, and said the proceeds would help finance the deal with Beach Petroleum Ltd. Analysts noted that Arrow already owned 60 percent of the field and is operator of the Tipton West field in the northeastern state of Queensland. Arrow said it would pay Beach A$260 million cash and A$70 million in Arrow shares. Beach will get an additional A$40 million when reserve levels are increased at Tipton West, and up to a further A$30 million if certain targets related to liquefied natural gas supply are met. Arrow, which is Royal Dutch Shell''s local partner in coal seam gas, said the acquisition would increase its total 2P gas reserves by 40 percent to 1,644 petajoules. On completion, 12 percent of Tipton West will be made available to Shell under a pre-emptive rights agreement, said Arrow, which has an agreement to supply gas to a proposed 1.5 million tonnes a year LNG project at the port of Gladstone in Queensland. Global oil giants, including U.S. major ConocoPhillips and Malaysia''s Petronas, have poured about A$22 billion into Australia''s coal steam gas companies since last year to secure reserves to feed a global rise in LNG demand. Demand for LNG, which is gas frozen as liquid for export in ships, is forecast to more than double by 2020 amid an increase in energy consumption and demand for cleaner-burning fuels.