THE WALL STREET JOURNAL

By ROSS KELLY and CYNTHIA KOONS

FRIDAY MARCH 19, 2010, 2:00 A.M. ET

SYDNEY—Arrow Energy Ltd. has yet to strike an agreement with Royal Dutch Shell PLC and PetroChina Co. on a takeover offer, people familiar with the matter said Friday amid mounting speculation of a sweetened offer from the pair.

“There is no agreement at this point,” one person said.

It has been nearly two weeks since Royal Dutch Shell and PetroChina offered 3.3 billion Australian dollars (US$3.0 billion) for Arrow’s Australian operations. The continuation of talks may cool speculation that an Arrow-endorsed deal is imminent.

Another person said it is “unlikely” a deal will be struck by the end of the day, but that anything is possible. Negotiations at this point involve “all aspects of the initial proposal”, the person said, without dismissing the possibility that a higher bid for the Australian assets could emerge.

Arrow said in a statement Friday that its shares will be halted from trading until Tuesday, or until it makes its next announcement on the offer.

All three parties have been locked in discussions for almost two weeks and a person familiar with the matter said Wednesday they’re “working really hard to see if there’s a deal here.”

Previously, a person involved with the talks said the separation of the domestic and international operations was a sticking point in negotiations. The original proposal would leave Arrow’s international operations in the hands of its existing shareholders.

Nik Burns, an energy analyst at RBS, said he is “very confident” of an improved bid and raised his target price on Arrow’s shares to A$5.45 from A$5.00.

Arrow hasn’t yet publicly responded to a A$4.45-a-share cash equal joint bid from Shell and PetroChina for its Australian assets, although most analysts agree the bid undervalues the assets.

“Arrow has been in active discussions with Shell and PetroChina over the past few days, probably thrashing out a revised offer,” Mr. Burns said in a note to clients. “With too much to lose on both sides if this deal falls over, we are very confident of an improved bid.”

Mr. Burns said Arrow needs a deal because more than 80% of its acreage is currently unexplored and the A$2.2 billion Fisherman’s Landing liquefied-natural-gas project in Queensland state was looking like a big ask from a funding perspective. “With no other bidder expected, maximizing the sale price should be Arrow’s primary objective,” Mr. Burns said.

Shell needs Arrow because it doesn’t have enough assets to back its claims that Australia is a key growth region with huge potential and PetroChina needs to secure long-term energy supplies, Mr. Burns said.

A spokesman for Arrow wasn’t immediately available for comment and a spokesman for Shell said the parties are still in talks.

PetroChina spokesman Mao Zefeng declined to comment specifically on the joint bid, saying the company would issue an appropriate press release if needed.

Merrill Lynch analyst Mark Hume said on Thursday that expected aggressive growth in Chinese demand for gas makes a sweetened bid for Arrow more likely.

—Aries Poon in Hong Kong contributed to this article.

Write to Ross Kelly at ross.kelly@dowjones.com

WSJ ARTICLE

Thu Mar 18, 2010 5:55pm EDT

(Reuters) – Royal Dutch Shell (RDSa.L) and PetroChina (0857.HK) are close to an agreed deal with Australia’s Arrow Energy Ltd (AOE.AX) to lift their A$3.3 billion ($3.05 billion) takeover offer, an Australian newspaper said.

The Australian Financial Review said in an unsourced report on Friday that the companies could announced a deal as soon as Friday, which could be higher than their March 8 offer for A$4.45 in cash per share Arrow share plus a share in a new entity holding its international business.

An Arrow spokesman did not immediately return calls seeking comment.

Arrow on Tuesday said it was in active talks with Shell and PetroChina, leading analysts to expect a sweetened deal.

(Reporting by Victoria Thieberger; editing by Balazs Koranyi)

REUTERS ARTICLE

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

MARCH 16, 2010 By Lananh Nguyen Of Dow Jones Newswires

LONDON (Dow Jones)–The startup of Royal Dutch Shell PLC’s (RDSB) Corrib gas project off the west coast of Ireland will be delayed to 2012-2013, the company said Tuesday in a strategy update.

The project was originally set to come online between 2010-2011, but has been held up. Shell was asked by Ireland’s planning board in late 2009 to consider an alternative route for a nine-kilometer onshore pipeline to deliver gas from its Corrib fields to a processing terminal in response to local opposition.

“In Ireland, the Corrib Gas Project is currently under development, and is largely complete (pending a final decision from the Irish planning board on an application for a nine kilometres onshore pipeline),” the company said in its 2009 annual report.

Shell is the operator of Corrib and has a 45% stake in the project.

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

(James Herron in London contributed to this report.)

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.

March 16, 2010

David Wighton: Business Editor’s commentary

He arrived with a bang and within weeks had axed 5,000 jobs. But eight months after taking over the helm at Royal Dutch Shell, is Peter Voser making progress turning around the supertanker?

Long derided as the most sluggish of the top oil companies, Shell will today try to persuade investors at its annual strategy briefing that it is back on course. There certainly are some encouraging signs. For six years, oil production has been drifting lower at an average of 3.5 per cent a year. But with a series of big projects due to give the figures a boost this year, production is expected to stabilise at about 3.2 million barrels a day in 2010. In 2011 it could start growing for the first time in almost a decade.

Mr Voser can claim only limited credit for this trend, which reflects years of investment. But his own changes are starting to have an impact, in particular a sweeping reordering of the company that has reduced costs and improved focus.

For years, Shell was plagued by delays and budget overruns on big projects. So far, his creation of a separate division, Projects and Technology, responsible for masterminding large-scale operations, seems to be working well. Compared with peers such as Exxon and BP, Shell has been slow to make such changes, but that means the potential for improvements is greater.

Mr Voser has promised at least another $1 billion in cost cuts this year and will provide further details today.

He is still grappling with huge challenges — not least Shell’s sprawling refining and marketing operation, which is struggling in the face of the industry’s most severe downturn in 20 years. The group’s poor record at finding new supplies of oil and gas also remains a profound problem which Voser must address.

Still, his decision to sell some of Shell’s onshore Nigerian assets and bid for Arrow Energy, an Australian producer of coal-seam gas, show that he is willing to give the portfolio a good shaking. It will be years before Mr Voser’s performance can be judged properly — but so far so good.

david.wighton@thetimes.co.uk

TIMES ARTICLE

March 15 (Bloomberg) — Arrow Energy Ltd. may reject a A$3.3 billion takeover offer from Royal Dutch Shell Plc and PetroChina Co., the Australian Financial Review reported, without saying where it got the information. The time Arrow has spent evaluating the offer and analysts’ comments that the bid is too low have led to speculation the proposal will be rejected, the newspaper said.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

SOURCE ARTICLE

By James Paton

March 12 (Bloomberg) — Royal Dutch Shell Plc and PetroChina Co. may need to increase their offer by as much as 55 Australian cents a share to A$3.7 billion ($3.4 billion) to acquire Arrow Energy Ltd., said an analyst at RBS Morgans.

“Shell and PetroChina may have to sweeten their offer for Arrow to as much as A$5 a share,” Nik Burns, a Melbourne-based analyst, said in a note to investors. While the companies may need to raise the bid to at least A$4.80 a share, the transaction is “more than likely to proceed,” said Burns, who predicted last month that Shell may make an offer for Arrow.

David Williams, a Shell spokesman in the Hague, and Andrew Barber, spokesman for Brisbane-based Arrow, both declined to comment.

Shell and PetroChina offered A$4.45 a share for Arrow’s Australian coal-seam gas business, the company said on March 8. That values the proposal at about A$3.3 billion. Shareholders would also get stock in a new company comprising Arrow’s international assets.

If Shell is successful, the company may move fast to acquire AGL Energy Ltd.’s coal-seam gas interests in Queensland’s Bowen Basin, potentially for A$900 million, Burns said. Sydney-based AGL may sell its 50 percent stake in the Moranbah field should Shell acquire Arrow, it said yesterday.

Shell and PetroChina may be bidding for Arrow as part of a 50-50 joint venture, according to Burns.

–Editors: Alex Devine, Raj Rajendran.

To contact the reporter on this story: James Paton in Sydney at jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash in Singapore at aprakash1@bloomberg.net.

SOURCE ARTICLE

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

March 9 (Bloomberg) — Royal Dutch Shell Plc and PetroChina may need to increase their bid for Arrow Energy Ltd. by as much as 18 percent to A$3.9 billion ($3.5 billion) based on similar transactions in Australia, Sanford C. Bernstein & Co. said.