Shell-PetroChina JV Hits Bulls-Eye in LNG Market
Shell Energy Holdings Australia Ltd. (Shell), a subsidiary of Royal Dutch Shell plc, and PetroChina International Investment Company Ltd (PetroChina), a subsidiary of PetroChina Company Limited, welcome the announcement by the Board of Arrow Energy Limited to unanimously recommend its shareholders vote in favor of the joint proposal to acquire 100% of Arrow shares.
CS CSG (Australia) Pty Ltd, the 50/50 joint venture company owned by Shell and a subsidiary of PetroChina, has entered into an agreement with Arrow for the proposed acquisition under which it has agreed to pay A$4.70 cash per share for all of the shares in Arrow, representing a total consideration of A$3.5 billion (~US $3.2 billion). This allows Arrow shareholders to crystallize the value of the Queensland Coal Seam Gas (CSG) assets and realize a significant premium for their shares.
The offer is subject to customary conditions including regulatory approvals and Arrow shareholder approval.
Arrow has also announced its intention to make a pro-rata share distribution to its shareholders relating to the international assets and certain other interests. This enables Arrow's shareholders to retain exposure to, and benefit from, any potential future growth in those holdings.
On successful completion of the acquisition, the joint venture would own Arrow's Queensland CSG assets and domestic power business as well as Shell's Queensland CSG assets and its site for a proposed liquefied natural gas (LNG) plant on Curtis Island at Gladstone.
Shell and PetroChina bring technical capabilities, capital backing, major project experience and LNG marketing ability which will facilitate the growth of Queensland's CSG and LNG industry, and help to further develop Australia's LNG sector.
Malcolm Brinded, Royal Dutch Shell’s Executive Director of Upstream International, said, "This transaction combines Shell's global LNG expertise, PetroChina's operational experience, and our access to regional gas markets. The new joint venture will be an important growth asset for Shell, and help meet growing demand for cleaner energy in Australia and international markets. We expect to take the final investment decision on this large LNG project by 2012."
Arrow is expected to hold a shareholder meeting mid July 2010 to allow shareholders to vote on the offer.
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