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Agreement reached to acquire Arrow Energy Limited

Shell Energy Holdings Australia Ltd. (Shell), a subsidiary of Royal Dutch Shell plc, and PetroChina International Investment Company Ltd (PetroChina), a subsidiary of PetroChina Company Limited, welcome the announcement by the Board of Arrow Energy Limited (Arrow) to unanimously recommend its shareholders vote in favour of the joint proposal to acquire 100% of Arrow shares(*).

CS CSG (Australia) Pty Ltd, the 50/50 joint venture company owned by Shell and a subsidiary of PetroChina, has entered into an agreement with Arrow for the proposed acquisition under which it has agreed to pay A$4.70 cash per share for all of the shares in Arrow, representing a total consideration of A$3.5 billion.  This allows Arrow shareholders to crystallise the value of the Queensland Coal Seam Gas (CSG) assets and realise a significant premium for their shares.

The offer is subject to customary conditions including regulatory approvals and Arrow shareholder approval.

Arrow has also announced its intention to make a pro-rata share distribution to its shareholders relating to the international assets and certain other interests.  This enables Arrow’s shareholders to retain exposure to, and benefit from, any potential future growth in those holdings.

On successful completion of the acquisition, the joint venture would own Arrow’s Queensland CSG assets and domestic power business as well as Shell’s Queensland CSG assets and its site for a proposed liquefied natural gas (LNG) plant on Curtis Island at Gladstone.

Shell and PetroChina bring technical capabilities, capital backing, major project experience and LNG marketing ability which will facilitate the growth of Queensland’s CSG and LNG industry, and help to further develop Australia’s LNG sector.

Shell’s Chairman in Australia, Russell Caplan, said “The proposal is good for jobs, good for Queensland and good for the long-term future of the CSG industry in Australia.  In addition to the quality of its assets, both Shell and PetroChina are attracted to the quality of Arrow’s employees, all of whom should be proud of the role they have played in building this great company.”

Mr Qiliang Bo, Vice President of PetroChina Company Limited, said “The CSG to LNG project to be developed by the joint venture is an extremely exciting project and Shell’s and PetroChina’s technical and financial capabilities will underpin the next phase of this significant development.”

Mr Malcolm Brinded, Royal Dutch Shell’s Executive Director of Upstream International, said “This transaction combines Shell’s global LNG expertise, PetroChina’s operational experience, and our access to regional gas markets.  The new joint venture will be an important growth asset for Shell, and help meet growing demand for cleaner energy in Australia and international markets.  We expect to take the final investment decision on this large LNG project by 2012.”

Mrs Aiji Ge, PetroChina’s Project Manager, said “The proposal would create jobs and generate additional economic activity for Queensland through the export of 7 to 8 mtpa of LNG from the proposed Curtis Island LNG plant.  PetroChina sees this joint venture as a significant commitment to building an integrated CSG and LNG business while continuing to supply domestic gas in Queensland.”

Arrow is expected to hold a shareholder meeting mid July 2010 to allow shareholders to vote on the offer.  
 

(*) The Board of Arrow support the proposed transaction in the absence of a superior proposal and upon the completion of an independent expert’s report concluding the proposal is in the best interests of Arrow shareholders.

Enquiries

Media Relations:
Shell International, US, UK press: +44 20 7934 3600
The Netherlands and European press: +31 70 377 8750
Shell Australia: Phil Connole +61 417 063 605

PetroChina - Xinxiang Yuan: +86 10 5998 6037
CS CSG (Australia) Pty Ltd - Jim Kelly, FD Third Person: +61 412 549 083

Investor Relations:
Den Haag - Tjerk Huysinga:  +31 70 377 3996 / +44 207 934 3856
Houston - Harold Hatchett: +1 713 241 1019

Cautionary note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this press release “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this press release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this press release, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 34% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
 This press release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended 31 December, 2009 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader.  Each forward-looking statement speaks only as of the date of this release, 22 March 2010. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release.