Arrow to Farmin to Chinese Blocks
Arrow Global CBM Pty Ltd ("AGCBM") and Orion Energy ("Orion") have signed a Letter of Intent for broad ranging cooperation in China.
Orion is a US-based privately owned energy company specializing in Coal Bed Methane ("CBM") operations and services, operating solely in China. It is the largest provider of horizontal drilling services to the rapidly growing Chinese CBM industry and is also the owner of two CBM concessions.
Under the terms of the LOI:
--AGCBM and Orion will perform a joint technical and commercial study of two concession blocks, in China's premiere CBM basins of Ordos and Qinshu, in which Orion already has 70% upstream working interest. Arrow will earn 5% share in both of these blocks by virtue of performing the study and will have an option to farm in for a further 25% based on funding a work program to be agreed, up to a maximum of $10 million; --Orion will act as Arrow's partner and representative in China and will use their significant in-country relationships to help consolidate and grow the combined companies businesses in China; and --The two companies will look for a broad range of additional opportunities in the CBM industry in China using both companies' extensive data bases and have the intent to grow a significant, multi asset, business together.
It is anticipated that the study phase of the farm-in will be completed within 2 months.
Following successful completion of the farm-in, these assets will become part of the portfolio of AGCBM. AGCBM is also in the advanced stages of business development in Indonesia and Vietnam and is targeting adding these assets to the portfolio.
It is planned that the AGCBM portfolio together with the existing Arrow India assets will form part of the proposed partial IPO of Arrow International later this year.
Arrow Energy N.L. recently acquired 50% of the issued capital of Arrow Global CBM Pty Ltd, and has a 2 year option to acquire the remaining 50% shareholding.