Arrow Energy to Fund Expansion with $67 Million Options Deal
Aggressive expansion plans by coal seam gas company Arrow Energy N.L. on Wednesday were boosted with the signing of an options underwriting agreement which will net the company $67 million.
Arrow Chief Executive Nick Davies said the underwriting agreement with Wilson HTM Corporate Finance Limited is for Arrow's outstanding listed 75 cent options which expire on December 1, 2006.
Mr. Davies said the agreement would help fund the company's focus on its corporate strategy of building on its solid and growing production base, branching into higher margin products such as gas to liquids and extending its footprints internationally, to grow shareholder value.
"This funding will enable us to aggressively pursue this rapid growth strategy we have outlined and also further advance existing projects," he said.
The Brisbane-based company said the merger earlier this year with CH4 Gas Limited had increased its technical and commercial depth, geographic spread, international experience and financial strength.
Mr. Davies said existing projects slated for more funding include additional reserves certification programs, exploration and appraisal programs on a number of Arrow's 15 appraisal projects including three pilot developments, expansion of the Moranbah field in the Bowen Basin for additional sales, and the development of the Dundee field in the Surat Basin.
The funds will also go towards initial exploration and appraisal of three recently awarded Coal Bed Methane ("CBM") projects in India with an estimated resource of about 11.6 trillion cubic feet of gas.
Mr. Davies said Arrow's new international focus may also include China and Indonesia.
"Both China and Indonesia offer tremendous opportunities for us to invest in CBM projects, and there are a number of opportunities being reviewed" he said.
Arrow will be pursuing an aggressive reserve certification program across a number of its project areas over the next two years to build on its current net reserve base of 498 PJ of 2P reserves and 2,780 PJ of 3P reserves
It will establish a program targeting an additional 700 PJ of 2P reserves in the Moranbah area (Arrow 50%) which has recently been announced. Near term programs targeting significant reserves additions of 300 - 500 PJ of 2P reserves from Arrow's Surat, Styx, Boyne River and Clarence Moreton project areas are currently being finalized.
Arrow's net gas production is currently at the rate of 10.4 PJ per year and expected
production is 10.8 PJ for FY07 and 18 - 19 PJ for FY08.