Arrow OKs $3.1b Shell-PetroChina takeover

Updated: 2010-07-14 16:40
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Arrow Energy Ltd shareholders approved a A$3.5 billion ($3.1 billion) takeover by Royal Dutch Shell Plc and PetroChina Co, giving the buyers reserves to feed an Australian liquefied natural gas venture.

Shareholders also backed the spinoff of Dart Energy Ltd, a new company that will hold Arrow's overseas gas assets and stakes in Australian-listed companies, the Brisbane-based company said in a statement to the stock exchange in Sydney today. The transactions need Australian federal court approval.

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The Shell and PetroChina deal is even more attractive after Australia proposed a new tax on resource projects and Environment Minister Peter Garrett deferred a decision to approve rival LNG ventures proposed by Santos Ltd and BG Group Plc, said Shaun Scott, Arrow's chief executive officer.

"The environment has changed," Scott said in a phone interview from Brisbane today. "What has been highlighted in the last few months is that there's a lot more risk. At the end of the day the reality is that big projects are better off in the hands of big companies like Shell and PetroChina."

Shell plans to build the Curtis Island LNG project, which would convert gas extracted from coal seams into liquid form for export. The venture is one of more than a dozen in Australia aimed at tapping rising Asian demand for the fuel.

Arrow rose 0.4 percent to A$4.99 in Sydney trading, valuing the company at about A$3.67 billion, while the benchmark S&P/ASX 200 Index climbed 1.9 percent. Investors will get one Dart share for every two Arrow shares. Arrow's closing price today gives Dart an implied value of 58 Australian cents a share.

Dart's management team has spent a week each in Australia, Asia, Europe and the US pitching the new company to potential shareholders, Scott said.

China's National Development and Reform Commission has cleared the Shell-PetroChina acquisition, Arrow said today. Dart is set to begin trading July 22, with the Shell and PetroChina takeover due to be implemented August 23, Arrow said.

Shell and PetroChina plan to invest the funds required to develop a "world-scale LNG plant" on Curtis Island as they continue to work with Arrow to complete the deal, the companies said in a statement today after the shareholder vote. A hearing on the takeover is scheduled in Australian federal court July 29, Shell said.