REUTERS

(Reuters) – Australia Arrow Energy Ltd (AOE.AX) has opened its books to Royal Dutch Shell (RDSa.L) and PetroChina (0857.HK) for them to conduct due diligence for their joint takeover offer worth at least A$3.3 billion ($3.03 billion) sources said on Wednesday.

One of the sources said Arrow is expected to make a response on the offer within days. ($1=1.088 Australian Dollar)

(Reporting by Fayen Wong; Editing by Michael Perry)

REUTERS SOURCE ARTICLE

THE WALL STREET JOURNAL

Shell: Refinery Sales Could Be Stalled By Potential Essar IPO

By Lananh Nguyen Of DOW JONES NEWSWIRES MARCH 16, 2010, 12:33 P.M. ET

LONDON (Dow Jones)–India’s Essar Oil Ltd.’s (500134.BY) potential London listing could stall the company’s negotiations to buy three European refineries from Royal Dutch Shell PLC (RDSB), Shell’s Chief Financial Officer Simon Henry said Tuesday.

“While those negotiations [for an initial public offering] are going on, it’s very difficult for them to go forward,” with the purchase of the Heide and Harburg refineries in Germany and the Stanlow plant in the U.K., but the companies are still in talks, Henry said at a Shell strategy update in London.

Shell plans to sell 15% of its global refining capacity, or about 600,000 barrels a day of capacity, and 35% of its retail business on expectations that the downstream industry will be over supplied “for some time,” said Shell’s Chief Executive Peter Voser in a statement.

Henry said it wouldn’t carry out a “fire sale” of its plants at cheap prices. Instead, if refinery sales weren’t completed, Shell would consider the closure of plants or conversion to storage terminals.

Shell hopes to develop its business in growth markets like China. Shell is studying the prospect of building an integrated refinery and petrochemical complex with Qatar and PetroChina Co. (PTR), said downstream director Mark Williams.

-By Lananh Nguyen, Dow Jones Newswires; +44 (0)20-7842-9479; lananh.nguyen@dowjones.com

WSJ ARTICLE

A stream of analyst comments and silence on the offer from the Australian coal-seam gas group has fuelled expectations that Arrow will reject the bid and the two parties will have to come in with a higher – and hostile – offer. Last week, Shell and PetroChina offered A$4.45 in cash for each Arrow share, plus a share in a new, international Arrow entity.

The Australian

Matt Chambers
Thursday March 11, 2010 12:00AM

ROYAL Dutch Shell will this month fly its new head of Australian production and exploration, Ann Pickard, into the centre of its $3.3 billion joint bid for Arrow Energy.

The appointment of Ms Pickard — head of Shell’s operations in the restive Nigerian delta oilfields and the rest of Africa for the past five years — is seen as a sign of Australia’s growing importance to Shell, which is planning big liquefied natural gas projects on the east and west coasts.

Shell has interests in the Gorgon, Browse, Prelude and Sunrise projects on the west coast and the Curtis Island LNG plant on the east coast. Ms Pickard is due to start in Australia at the end of the month.

Shell would not say whether its partnership with PetroChina to jointly acquire Arrow had influenced Ms Pickard’s start date.

There was no word from Arrow or Shell yesterday on the cash bid. Arrow is still deciding whether to dump its proposed purchase of LNG Ltd’s Fisherman’s Landing LNG project in Gladstone in favour of Shell and PetroChina’s $4.45 a share offer for its Australian assets. Arrow shares rose 1c to $5.03 yesterday.

The premium to the offer reflects the 50c to 75c at which analysts value Arrow’s international coal seam gas ground.

Ms Pickard’s previous posting in Lagos, Nigeria, has been described as the most dangerous executive job in global oil.

Last year, she was named the world’s 25th most powerful businesswoman by Forbes.

Ms Pickard will be a headline speaker at this year’s Australian Petroleum Production and Exploration Association conference in Brisbane in May.

SOURCE ARTICLE

(Reuters) – Royal Dutch Shell (RDSa.L) and PetroChina (0857.HK) jointly bid more than $3 billion for Australia’s Arrow Energy (AOE.AX), marking a Chinese firm’s first foray in the country’s burgeoning coal-seam gas sector and sending Arrow’s shares soaring by nearly half.

THE WALL STREET JOURNAL

MARCH 7, 2010, 9:01 P.M. ET

BEIJING (Dow Jones)–PetroChina Co (PTR) has just launched a bid with Royal Dutch Shell PLC (RDSA) for Australian energy producer Arrow Energy (AOE.AU), Jiang Jiemin, chairman of PetroChina confirmed Monday.

The joint bid was in its early stages and there was no timetable for the process, he said.

He declined to give details, such as the percentage share of PetroChina and Shell.

Jiang was speaking on the sidelines of China’s National People’s Congress, the nation’s annual legislative session, which ends March 14.

-Wan Xu contributed to this article; Dow Jones Newswires; 8610-84007799; wan.xu@dowjones.com

WSJ ARTICLE

Royal Dutch Shell signed an $800 million deal in 1999 to develop two huge oil fields expected to produce 190,000 barrels a day, and while that project was completed in 2005, it continues to receive payments as a result of its work. Shell has a second Iranian natural gas development projects in the works, but officials said they are awaiting the results of a feasability study before determining whether they will go forward with it. In the meantime, the company continues to supply oil lubricant to Iran, and until recently, had been a large supplier of gasoline to Iran. Shell is also a huge supplier of gasoline to the American military, won drilling rights in the Gulf of Mexico and in the Western United States, and shares with a company in China a $200,000 Export-Import Bank loan to build a petrochemical plant in that country. A Shell spokesman, David R. Williams, said that while the company would comply with any new international sanctions, Shell’s activities are not prohibited by European countries, adding that when the rules of different countries conflict “it makes compliance difficult.”

THE NEW YORK TIMES

Energy companies are on the prowl again.

After a two-year slowdown in mergers and acquisitions in the industry, companies are once again looking for ways to use their checkbooks to expand their reserves, buy new technology or snap up promising oil and gas fields.

Unlike the round of mergers that created today’s behemoths in the late 1990s, the current round is not expected to form new giant companies like Exxon Mobil or ConocoPhillips. This time, companies are focused on buying fast-growing small companies, or on acquisitions that expand their reserves in an era when it is hard for them to find new places to drill.

The targets include companies that own new fields in nations like Ghana and Sierra Leone, independent gas producers in the United States, and companies that control fields in the deep waters of the Gulf of Mexico.

“In this industry, where you’re in the business of increasing your reserves, there are two ways to do so — to drill or to acquire,” said Christopher W. Sheehan, director for mergers and acquisitions research at IHS Herold. “There is an intense competition for access to resources through mergers.”

This latest wave of consolidation comes amid fresh enthusiasm for natural gas production, especially in the United States, where new technology has significantly expanded the nation’s reserves. The huge potential of new gas fields has driven most mergers in the North American energy sector in recent months, with more to come this year, according to bankers and analysts.

Buying interest is particularly strong among the international oil majors, which had sold off many of their onshore assets in the United States over the last decade and are now eager to come back. Anthony B. Hayward, the chief executive of BP, said last month at the World Economic Forum in Davos, Switzerland, that the gas being extracted from beds of shale was “a complete game-changer. It probably transforms the U.S. energy outlook for the next 100 years.”

The biggest deal in that sector was announced in December, when Exxon Mobil said it would buy XTO Energy for $31 billion. Shortly after, Total of France said it would pay $800 million for a minority share in Chesapeake Energy’s Barnett shale gas portfolio. Chesapeake has raised about $11 billion from joint ventures for its shale gas assets in the last two years; BP and Royal Dutch Shell have struck similar agreements in recent months.

In a humorous note to investors, Bernstein Research analysts quipped recently: “Frankly, you can virtually plan your gym sessions around these deals, they are becoming so regular. Thinking about it, isn’t it about time for another Statoil deal?”

Statoil, the Norwegian national oil company, recently struck a deal with ConocoPhillips to trade some of its assets in the Gulf of Mexico for acreage that Conoco holds in the Chukchi Sea of Alaska; in November, Statoil agreed to pay $3.4 billion for a 32.5 percent stake in Chesapeake’s assets in the Marcellus shale formation in the Appalachian region.

“The growth opportunities from shale gas are something we haven’t seen in the United States for decades,” said Roger D. Read, managing director and senior energy analyst at Natixis Bleichroeder in Houston. “The United States, which had been a static market, now has the chance to grow its production.”

Bankers and energy consultants expect deals to pick up this year after a two-year lull. There were 244 deals in the global oil and gas industry last year, down from 285 in 2008, and 336 at the peak in 2007, according to data from IHS Herold, a consulting and advisory firm.

While the number of transactions was down, the size of the Exxon-XTO transaction helped raise the total value of last year’s mergers to $144 billion, up from $104 billion in 2008. (Merger values peaked at $200 billion in 1998, a year when many of today’s giant companies were created.)

Analysts point to a wide range of companies that are potentially on the market, including EOG Resources, Southwestern Energy, PetroHawk Energy, the Encana Corporation, Chesapeake Energy, Devon Energy and Anadarko Petroleum.

“There will be a shakeout there. It will be eat, or be eaten,” said James Bogues, who leads Accenture’s North America energy mergers and acquisition unit. “Given Exxon’s reputation as a very deliberate, cautious company, the fact they made such a bold move with XTO will no doubt inspire others that a price has been set for shale gas assets and technology.”

Outside of the United States, the pace of mergers has also picked up. Suncor Energy of Canada bought Petro-Canada in a deal valued at $18 billion at the time to form a national giant and stave off possible bids from foreign buyers, particularly Chinese companies. In West Africa, Exxon has offered $4 billion for a stake in an offshore field in Ghana, though that deal could fall through given the government’s threat to block the transaction; international firms, including Eni of Italy, are battling over some prospective fields in Uganda.

Chinese companies have also been particularly active. In August, Sinopec, one of China’s biggest oil companies, closed a $9 billion acquisition, buying Addax Petroleum, a Geneva-based oil explorer that is most active in Nigeria, Gabon and the Kurdistan region of Iraq.

Sinopec, formally known as the China Petroleum and Chemical Corporation, said the deal “represents the largest successful acquisition of overseas oil and gas assets by a Chinese company.”

The interest of national oil companies, like Sinopec, could prove a powerful and lasting driver for merger deals in the energy sector.

“The mandate of national oil companies is to go and find reserves around the world,” said Jon McCarter, the oil and gas transactions leader for the Americas at Ernst & Young. “They have been very active and very aggressive.”

NYT ARTICLE

Oil firm will sell 15% of refinery operations and slow down tar sands projects as fourth-quarter profits fall by 75%

LONDON (Dow Jones)–The Nigerian joint venture company operated by Royal Dutch Shell PLC (RDSB.LN) agreed Friday to sell its 30% interest in three oil production licenses that have been shut down since 2008 to a consortium led by local companies for an undisclosed sum, the venture said in a statement.