Arrow Energy Ltd., a major owner of gas assets in Australia, has agreed to a sweetened takeover bid from Royal Dutch Shell and PetroChina Co. worth Australian dollars 3.44 billion (US$3.15 billion). The deal comes as Australia ramps up major natural gas projects in response to booming demand from China and elsewhere as a less polluting fuel than coal to drive power generators.
Arrow said Monday in a statement to the stock exchange it received an offer from a joint venture company owned by Shell and PetroChina named CS CSG Pty. Ltd. for AU$4.70 cash per share. Two weeks ago, the joint venture launched its takeover bid with a cash-per-share offer of AU$4.45. Under the deal, Arrow will spin off its assets outside Australia - including interests in China, India, Vietnam and Indonesia - into a new company, Dart Energy Ltd., in which existing Arrow shareholders will get a stake. Arrow said its board was unanimously recommending that shareholders accept the offer.
Arrow Energy is an integrated energy company focused on supplying coal seam gas to eastern Australia and Asia. It claims to have the largest coal seam gas reserves in Queensland state. The company had been planning to list 20 percent of its Arrow International arm, retaining 70 percent, with the remainder already held by Royal Dutch Shell. Among major integrated oil companies, Shell considers itself expert in converting methane to liquefied natural gas, or LNG, so it can be shipped rather than piped away from its source. It has a separate LNG project in the works in Queensland that would benefit from the extra supply from Arrow.
PetroChina Co. is Asia's largest oil and gas company. Last year it signed agreements with Exxon Mobil Corp. worth $41 billion to buy LNG from the yet-to-be developed Gorgon gas field off Australia's far northwest coast.
