PetroChina & Shell To Acquire Arrow Energy

PetroChina (601857, 1857.HK) and Royal Dutch Shell have submitted a joint bid to acquire Australia's Arrow Energy for a total of A$3.26 billion, equivalent to about 20.2 billion yuan, reports in-en.com, citing an announcement by Arrow Energy.

The board of Arrow Energy was reported to have advised shareholders to accept the offer.

According to the acquisition plan, Arrow’s shareholders will receive A$4.45 per share plus each share of Arrow can be exchanged for a share of a new entity that includes the international business of Arrow Energy. The international business of Arrow Energy is not included in this acquisition.

Arrow Energy has the rights to explore coalbed methane in an area exceeding 65,000 square kilometers in Australia. At present, only ten percent of the area has been explored.

Net assets of Arrow Energy totaled $1.161 billion in 2009. Net profit surged 885 percent from 2008 to $367 million in 2009.

According to Jiang Jiemin, President of PetroChina, the acquisition is in the initial stages.

Developing coalbed methane is one of PetroChina's goals. The company is targeting to achieve proven coalbed methane reserves of 500 billion cubic meters and annual production volume of more than four billion cubic meters by 2015.

At present, China offers a number of tax breaks for the development of coalbed methane. In addition, enterprises can set the price of coalbed methane.

Analysts believe that the deal is likely to win the approval of the Australian government due to Shell's participation.