Arrow Energy is expected to inform the market later today of a sweetened offer from Royal Dutch Shell and PetroChina which is largely targeted at securing its coal seam gas reserves.
After spending the last two weeks in "active discussions" with Shell and PetroChina, BusinessDay believes Arrow has successfully put its case that the $3.3 billion, $4.45 a share offer, excluding its international operations, undervalues the company.
The market had been betting on an improved offer from the pair pushing Arrow shares up to $5.29 before the company went into a trading halt earlier this morning.
In the statement, Arrow requested the trading halt until Tuesday but sources say an announcement could be released late this afternoon.
The coal seam gas tie-up would continue consolidation in the overcrowded Queensland space, which currently has at least four proposed projects but which can only accommodate one or two.
The takeover will need the approval of the Foreign Investment Review Board. Analysts believe BG's takeover of Queensland Gas Company helps pave the way for FIRB to give the takeover the green light. However the involvement of PetroChina means the board will take a close look at the deal. FIRB has publicly stated its preference for state-owned companies to keep their stakes in Australia's peak resources assets to no more than 15 per cent, ensuring they stayed mostly in private hands.
With Arrow's partner in the Fisherman's Landing coal seam gas to liquefied natural gas project, LNG Ltd, earlier this week getting approval to seek other sources of gas it appears that Shell and PetroChina may have hit their target.
mmurphy@theage.com.au
The Age
