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Royal Dutch Shell tables £1.5bn bid for Australia’s Arrow Energy

The Sunday Telegraph

Royal Dutch Shell has made a A$3bn (£1.5bn) approach for Australian coal-seam gas producer Arrow Energy.

By Ben Harrington and Philip Aldrick
Published: 9:38PM BST 15 Aug 2009

The oil giant is understood to have discussed acquiring Arrow Energy several weeks ago as part of wider talks about investing further in the Australian company’s assets.

Arrow Energy confirmed the approach last week to the Australian Stock Exchange without naming the interested party after being forced to put out a statement due to takeover speculation. Arrow said: “The company continues to have discussions with parties with respect to the potential monetisation options for its considerable coal seam gas resources.

“It is noted that these discussions have included discussions with respect to potential change of control transactions. However, the company is unaware as to whether any change of control proposal will be forthcoming.”

Shell is believed to have made the opportunistic approach during talks about extending its interest in Arrow’s coal-seam gas assets. Although the discussions ended in stalemate, Shell is known to be interested and may return with a revised approach. Arrow is being advised by Citigroup and Australian brokers have been in the City over the past few days.

Shell already owns 30pc of Arrow’s Australian acreage and a 10pc stake in Arrow’s international unit. Arrow said last month that its gross proven and probable gas reserves were 52pc higher than previously thought.

Coal-seam gas is being touted as the next big thing in Liquefied Natural Gas (LNG), with Australia rich in the resource and Arrow the largest holder of acreage in the country. Britain’s BG Group as well as ConocoPhillips are among companies that have taken stakes in LNG ventures in Queensland to meet demand in Asia.

Shell declined to comment.

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