Arrow Energy to Accept Improved Shell-PetroChina Takeover Bid

Submitted by Jim Thesiger on 22 March, 2010 - 06:42

Arrow Energy (AOE) is set to accept the takeover offer of Shell and PetroChina after it managed to convince the bidders to raise their offer by several hundred million dollars. Arrow is expected to make an announcement today regarding selling their Australian assets for more than $3 billion to the foreign companies. It is to be mentioned that this is the second Queensland based coal-seam gas frontier that is going to be acquired by overseas companies. The improved bid, something that is believed to be around $4.70 to $4.80 per share is still somewhat lower than the expectations of some analysts who expected the offer to be $5 a share, which would have boosted the value of the company to $3.7 billion. However, it is realised that New Hope- the largest Arrow shareholder has signaled that it is going to accept new offer. Arrow suspended its trades since Friday when its stocks traded at $5.29.

Arrow is expected to appoint an independent expert who will be assessing the offer on behalf of its investors. The takeover is required to get the approval from the Foreign Investment Review Board (FIRB). Although FIRB did approve the takeover of fellow coal-seam gas pioneer Queensland Gas for as much as $5.4 billion during the year 2008, which was bought by Britain based BG Group, PetroChina’s presence in case of the Arrow bid is likely to go through additional examinations. It is to be mentioned that China based PetroChina is a state-owned company which is involved in the bidding join venture with Shell.

Although talks were held among FIRB, Shell and PetroChina, but no formal document was longed yet. Both the companies involved in the Arrow bid owns 50 percent of the bidding vehicle and are expected to file separate applications to FIRB. Before being approached by Shell and PetroChina, Arrow was in talks regarding purchasing the Fisherman's Landing liquefied natural gas project of LNG Ltd which is located at Gladstone in central Queensland. However, that deal is close to be abandoned for sure due to the fact that Shell and PetroChina are expected to feed a new LNG plant on Curtis Island by utilising the reserves of Arrow.