Shell, Petro China seal Arrow Energy acquisition with $3.2 billion revised offer

Arrow Energy, Australia's coal seam gas (CSG) producer yesterday agreed to sell itself to Royal Dutch Shell and Chinese state owned petroleum major PetroChina after both companies revised and hiked the acquisition offer.

Early this month, Shell, which already holds a 30-per cent stake in Arrow's domestic assets, had teamed up with PetroChina and proposed to acquire Brisbane-based Arrow Energy for A$3.3 billion ($3 billion), which valued Arrow's shares at $4.45, a 28-per cent premium on March first week's close of $3.48. (See: PetroChina, Royal Dutch Shell bid $3 billion for Australia's Arrow Energy)

But with Arrow taking more than a week to commit to the deal, a string of analysts had commented that the delay suggests that the company is likely to reject the offer as being low, which was also reported by the Australian Financial Review citing sources. (See: Arrow may reject $3 billion PetroChina - Shell takeover offer)

Yesterday Shell, PetroChina hiked their offer marginally to $4.70 per share, taking the bid value to $3.2 billion or A$3.5 billion.

The acquisition gives Shell and PetroChina control of 37 per cent of Australia's coal seam gas reserves, and enables the companies to sell the gas production to China and other Asian importers via liquefied natural gas shipments.

Shell's chairman in Australia, Russell Caplan, said, ''The proposal is good for jobs, good for Queensland and good for the long-term future of the CSG industry in Australia. In addition to the quality of its assets, both Shell and PetroChina are attracted to the quality of Arrow's employees, all of whom should be proud of the role they have played in building this great company.''

Qiliang Bo, vice president of PetroChina, said ''The CSG to LNG project to be developed by the joint venture is an extremely exciting project and Shell's and PetroChina's technical and financial capabilities will underpin the next phase of this significant development.''