Arrow Energy Ltd. – a joint venture between global energy firm Royal Dutch Shell Plc (RDS.A) and state-controlled Chinese energy giant PetroChina Company Limited (PTR) – announced that it has made a preliminary, non-binding offer of A$520 million or $543 million to acquire Australian gas explorer Bow Energy.
Queensland-based Arrow’s purchase price offer of A$1.48 per share in cash represents 67% premium to Bow’s Friday’s closing price of 88.5 cents. Arrow targets to utilize Bow Energy resources for the expansion of its proposed liquefied natural gas (LNG) project in Australia.
Arrow Energy, which was acquired by Shell and PetroChina for A$3.4 billion about a year ago, plans to set up an LNG plant on Curtis Island with an initial capacity of 8 million tons per annum. The facility will be designed with two trains, each producing four million tons of LNG per annum for export, with expandable capacity.
If successful, the acquisition will help Arrow Energy to receive additional gas reserves thereby doubling the venture’s initial capacity to 16 mtpa in the second phase. The project is expected to be operational in 2017.
Last week, Arrow Energy went ahead with the design phase for the first stage of its LNG project, awarding a front-end engineering and design contract to Japan's Chiyoda Corporation.
We appreciate Shell’s and PetroChina’s efforts to develop the potentially lucrative natural gas business, which is expected to witness strong growth in the coming years.
The Hague-based Shell has operations worldwide and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources and other energy related businesses.
Headquartered in Beijing, PetroChina is engaged in exploration, development, production and sale of crude oil and natural gas; refining, transportation, storage and marketing of petroleum products; manufacture and sale of chemical products as well as transmission of natural gas, crude oil and refined products.
We maintain a long-term Neutral rating on both Shell and PetroChina. Both companies currently retain a Zacks #3 Rank, which translates into short-term Hold rating.
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