3:00AM New York, 7:00PM Sydney – Arrow Energy surges on a deal with Royal Dutch Shell.
Market Sentiments
ASX 200 index was up 0.1% or 7.6 to close at 5,662.30. The Preliminary market turnover was 1.94 billion, worth $5.72 billion, with 554 stocks up, 711 stocks moving down and 308 unchanged. The most traded stock was Empire Oil & Gas with 252.5 million shares worth $5.7 million.
Arrow Energy surges 14% on a deal with Royal Dutch Shell
Arrow Energy and Shell Exploration Company B.V, a subsidiary of Royal Dutch Shell PLC today signed a preliminary agreement, which details a number of domestic and international transactions to be finalized by the end of the third quarter.
Under the $776 million deal, Arrow said in a statement, Shell would take a 30% interest in Arrow's Australian upstream tenements for up to $644 million and a 10% stake of Arrow International Pte Ltd which holds all of Arrow's international assets for up to $132 million.
The Australian acquisition, Arrow said, consists of a $435 million upfront payment, a $140 million payment upon final investment decision of an LNG project and an additional $70 million payment when the LNG project is producing an annualised equivalent of one million tons per annum of LNG.
Natural gas consumption around the world is expected to double in next seven years and producers are looking for ways to transport in a liquefied state. Electric power producers in the U.S. and Europe are expected to convert plants to cleaner burning fuel and to reduce their carbon emissions.
The international acquisition is made up of a $53 million upfront payment, a $27 million payment upon signing of a further production contract, a $53 million payment for certifying 5 trillion cubic feet in 2P reserves prior to the end of 2015, (reduced pro rata to $27 million if only half this amount is certified).
It also includes a 5-year option for Shell to back into any Arrow International project for 50% of Arrow's interest, by payment of 50% of back costs from 1 January 2008. This option excludes the three currently held coal bed methane licenses in India.
Shell will have the right to off-take LNG produced utilizing gas from the Arrow/Shell upstream tenements, subject to the execution of a binding agreement for such off-take, on market based terms with the LNG sellers.
Mr Davies said the deal was a company-making event for Arrow. ""Arrow has the largest CSG acreage position in eastern Australia and a growing presence in four Asian countries.
""Working with a world leading energy player like Shell will serve to make the most of our world class assets and expertise and deliver tremendous value to shareholders. This is the most significant milestone in the company's history,"" Mr Davies said.
""Shell is extremely supportive of the potential for LNG development in Queensland. This transaction is a significant endorsement of and further step in the execution of our margin enhancement strategy and will facilitate Arrow's goal to connect its large onshore gas resources with high value and strongly growing international markets,"" he said.
Gainers and losers
Of the ASX 200 index stocks, Sundance Resource led the gainers with a rise of 25.3% followed by increases in Arrow Energy Ltd of 13.8%, in AED Oil Ltd of 6.1%, in Fortescue Metals of 5.5% and in WorleyParsons of 5.2%.
Of the ASX 200 index stocks, Platinum Asset led the decliners with a fall of 8.3% followed by losses in Allco Finance Group of 6.8%, in St George Bank of 6.6%, in ABC Learning of 5.8% and in Forster's Group of 5.6%.
Centro gets another reprieve
Centro Properties Group announced today that its financiers had been granted it additional liquidity facilities to December 15 2008. The mall properties owner owes $2.3 billion to the Australian banks and $450 million to US private placement creditors.
Centro said in a statement that the US lending group had reconfirmed the extension of the US joint venture facilities to 30 September 2008. |
