Last week, a company jointly owned by Royal Dutch Shell and PetroChina sent Arrow Energy a take-over bid worth US$ 3billion.
Arrow Energy claim to have the largest coal seam gas reserves in Queensland state. Shell considers itself an expert at converting methane gas into LNG, and acquiring Arrow Energy’s assets would significantly boost its reserves.
However, their preliminary bid valued Arrow Energy at US$ 4.06 per share; Arrow Energy took time to appoint financial and legal advisers to anaylse the bid, but judging from the amount of time it has taken to respond it is likely that it will reject the bid as being too low.
John Young, energy analyst at Wilson HTM Investment Group said, “my view is that they (Shell/PetroChina) will need to raise their offer to the high US$ 5 – US$ 6 (per share) range for the deal to go through.” If Arrow Energy do reject the bid, then it is likely that Shell and PetroChina will return with a higher hostile bid, which will leave the decision up to the Arrow Energy shareholders to decide.
Analysts at JP Morgan and Macquarie have stated that it is very unlikely that any ‘white knight’ will come to Arrow Energy’s aid, given that Shell already own 30% of Arrow Energy’s domestic gas assets and it is partnered with a Chinese major. Arrow Energy now need to decide if its shareholders interests are better served by pursuing its own LNG plans and developing the Fisherman’s Landing facility or by accepting the bid from Shell and PetroChina who plan to divert Arrow’s gas assets to their own facility.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/15032010/arrow-energy-set-to-reject-us$-3-billion-takeover-bid/