Royal
Dutch Shell and PetroChina
made a joint offer to acquire Australian-based coal-seam gas producer Arrow
Energy, with a cash offer of AUD 4.45 per share plus a share in a
new entity running Arrow's international business. This equates to a
total offer of AUD 3.3 billion or about £2 billion ($3 billion).
This offer marks another move by Royal Dutch Shell to enhance its
interests in coal-seam gas production in Australia after its June 2008
purchase of 30% of Arrow's upstream assets and 10% of Arrow's
international operations for AUD 776 million. Shell was reportedly in
discussions in August 2009 to acquire Arrow Energy for AUD 3 billion,
but talks ended in a stalemate.
This deal makes sense for the Anglo-Dutch oil giant as a way to secure
Australian gas supply for its proposed Gladstone liquefied natural gas
project (LNG) on Curtis Island in Queensland, Australia, which is
currently under review for potential production by 2014 or 2015. By
partnering with Royal Dutch Shell, PetroChina continues its efforts to
secure energy assets outside of China.
Catharina Milostan is a Morningstar equity analyst.
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