Proactiveinvestors recommends
Additional Information
Market: ASX
Sector: Energy
EPIC: AOE
1 year chart
digital-look imported chart image
1 day chart
digital-look imported chart image
Watchlist/Portfolio

Add to watchlist:

Only registered members can add into watchlist !

Register here !
Arrow Energy
www.arrowenergy.com.au

Arrow Energy is engaged in undertaking of gas exploration, development and production, as well as power generation in Australia and Asia. The Company also focuses on reviewing and acquiring opportunities to participate in gas exploration activities in Australia and Asia.

Full Arrow Energy profile here
Pdf

Arrow Energy acquires stake in Chinese project for US$13.3m

21st Dec 2009, 9:42 am

Australian integrated energy company Arrow Energy (ASX: AOE) has advanced its plans to create the first global coal seam gas company after acquiring a major stake in a highly prospective coal seam gas block in China in a deal worth US£13.3m.

The company's subsidiary Arrow Energy International has signed an agreement with Fortune Oil subsidiary, Fortune Green Energy (FGE) to acquire a 35 percent stake in Fortune Liulin Gas.

Following the announcement, shares in Arrow increased 2% to $3.97.

Total consideration for this stake is US$13.3m with US$6m of these funds being committed to the 2010 work program which includes the drilling of horizontal pilot wells. Arrow has conditional options to increase its stake to 75 percent over time.

Fortune Liulin Gas’ sole asset is a 50 percent participating interest in the Luilin Coal Bed Methane block which has been the subject of considerable exploration activity since 1999, and is one of the most advanced CBM prospects in China.

The block has certified 3P reserves of 89 petajoules. Arrow’s net interest will be 15 PJ of certified 3P reserves once the transaction is completed. Arrow expects further reserves certification within the next two years.

The Luilin block covers 198 km2 and is located 35 km from Luliang and 500 km south-west of Beijing within the south-east Ordos Basin in Shanxi Province. There are three target coal seams with high gas content and saturations. The block is immediately to the north of the Shilou block in which Shell, AEI's 10% shareholder and partner in Australia, has an interest.

In February 2009, the Liulin block was designated a State Special Pilot Project enabling the acceleration of the exploration and development program. Arrow, Fortune and CUCBM, the Chinese counterparty to the Production Sharing Contract covering the transaction, will be working collaboratively to achieve commercial gas production from the block within 12 to 18 months.

Arrow Energy Chief Executive Officer Nick Davies said the transaction was a significant step forward for Arrow International in China.

“The advanced status of the Liulin block represents a unique opportunity for Arrow to showcase its skills and capabilities and achieve near-term production and gas sales while providing the company with some existing reserves,” Mr Davies said.

“We look forward to working closely with Fortune Oil and our Chinese partners at CUCBM on realising the potential of this block."

The project is expected to be the first of a series of co-operations in China that combine Arrow’s upstream expertise with Fortune’s gas distribution capabilities in China. This will include co-operation on coal mine degassing, a priority area for China in tackling coal mine safety and climate change.

Fortune Oil is a London Stock Exchange listed independent energy company focusing on the oil and gas markets in China. Fortune Oil’s main business areas are in aviation fuel, single point mooring ownership and operation, oil products terminal ownership and operation, products trading, natural gas distribution and coal bed methane.

the south-east Ordos Basin in Shanxi Province. There are three target coal seams with high gas content and saturations. The block is immediately to the north of the Shilou block in which Shell, AEI's 10% shareholder and partner in Australia, has an interest.

In February 2009, the Liulin block was designated a State Special Pilot Project enabling the acceleration of the exploration and development program. Arrow, Fortune and CUCBM, the Chinese counterparty to the Production Sharing Contract covering the transaction, will be working collaboratively to achieve commercial gas production from the block within 12 to 18 months.

Arrow Energy Chief Executive Nick Davies said the transaction was a significant step forward for Arrow International in China.

“The advanced status of the Liulin block represents a unique opportunity for Arrow to showcase its skills and capabilities and achieve near-term production and gas sales while providing the company with some existing reserves,” Mr Davies said.

“We look forward to working closely with Fortune Oil and our Chinese partners at CUCBM on realising the potential of this block."

The project is expected to be the first of a series of co-operations in China that combine Arrow’s upstream expertise with Fortune’s gas distribution capabilities in China. This will include co-operation on coal mine degassing, a priority area for China in tackling coal mine safety and climate change.

Fortune Oil is a London Stock Exchange listed independent energy company focusing on the oil and gas markets in China. Fortune Oil’s main business areas are in aviation fuel, single point mooring ownership and operation, oil products terminal ownership and operation, products trading, natural gas distribution and coal bed methane.

No investment advice

The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.