Shell and PetroChina bid for Arrow

MORNINGSTAR VIEW: This deal makes sense for the Anglo-Dutch oil giant and is in line with the Chinese firm's strategy

Catharina Milostan 9 March, 2010 | 9:28AM
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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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Catharina Milostan  Catharina Milostan is a stock analyst with Morningstar.

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