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Arrow Energy Closes Offer for Pure, Wins 20.31% Stake

Bloomberg.com

By Angela Macdonald-Smith

March 16 (Bloomberg) — Arrow Energy Ltd., the Australian coal seam gas producer whose bid for Pure Energy Resources Ltd. was topped by BG Group Plc, let its offer expire without gaining majority control.

The offer closed March 13, leaving Arrow with a 20.31 percent interest in Pure, Brisbane-based Arrow said today in a filing to the Australian stock exchange. The company, Royal Dutch Shell Plc’s Australian partner in gas extracted from coal seams, didn’t say what its plans are for the stake.

BG, the U.K.’s third-biggest natural gas company, is offering A$1.03 billion ($674 million) or A$8.25 a share in cash for Pure should it reach 90 percent acceptances. Otherwise, shareholders in the Brisbane-based coal-seam gas explorer will get A$8 a share under the unconditional offer from the British company, which is seeking more reserves to feed a proposed gas export project in Queensland.

BG held about 33 percent of Pure as of March 13, according to a separate filing to the exchange. Shell, owner of about 11.2 percent of Pure, said March 3 it will sell its stake to BG in the absence of a higher bid. BG’s offer is due to close March 23.

Arrow separately today said its international unit agreed to buy 75.25 percent of Far East Energy Corp.’s stake in the Qinnan coal-seam methane venture in China. The Australian company also agreed to invest in convertible notes, which, if converted, will give it an 11.5 percent stake in Far East Energy.

The Qinnan project in Shanxi Province represents “one of the best prospects for near-term commercial coal-bed methane production in China,” Arrow Chief Executive Officer Nick Davies said in the statement, also sent to the exchange. “We expect Qinnan to become a material project within the Arrow portfolio.”

Houston-based Far East Energy is the operator and foreign contractor to China United Coalbed Methane for three permit areas, including the Qinnan block, which will be transferred “shortly” to PetroChina Co., Arrow said. Shell will have the right to take half of Arrow’s interest in the venture, it said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at[email protected]

Last Updated: March 15, 2009 19:16 EDT

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