March 24 (Bloomberg) -- BG Group Plc will take over Australia’s Pure Energy Resources Ltd. from Arrow Energy Ltd., which accepted a cash offer of A$1.03 billion ($729 million).

Arrow agreed to sell its 20.3 percent stake in the Australian coal-seam gas explorer, taking BG’s stake to more than 90 percent and boosting the value of the bid to A$8.25 a share. Brisbane-based Arrow will make a profit of about A$200 million on its investment in Pure, it said today in a statement.

Reading, England-based BG needs more gas reserves to expand its Australian liquefied natural gas project. It took over Queensland Gas Co., which produces methane from coal seams, for A$5.2 billion last year to advance the planned A$8 billion Queensland Curtis LNG venture to make fuel and export to Asia.

“The Pure Energy asset base will not make a great deal of difference for a number of years yet,” Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking, said by phone. “The benefits of Queensland Gas are going to be the main focus for BG Group over the next couple of years in Australia, and the Pure Energy resource base is bolt-on strategy.”

BG is paying almost triple Pure’s trading price before Arrow made an initial offer in December. Under Australian takeover regulations, a bidder that gets at least 90 percent acceptances can compulsorily acquire the remaining shares.

Compulsory Acquisition

“BG Group intends to issue compulsory acquisition notices before the close of the offer” at 7 p.m. Sydney time on April 6, according to a statement. BG will nominate three directors to Pure’s board starting from tomorrow.

BG plans to de-list Pure and integrate it with Queensland Gas, it said in its bidder statement on Feb. 17. BG fell 7 pence, or 0.6 percent, to 1,095 pence in London trading.

Pure is exploring for coal-seam gas, which mostly comprises methane on the surface of coal. The gas can be extracted when pressure on the seams is reduced, usually by removing water.

“In weighing up our options, we concluded that the level of BG’s bid had risen to a point where more value can be achieved for Arrow shareholders by accepting BG’s offer and investing these funds elsewhere,” Nick Davies, Arrow chief executive officer, said in the statement. “BG’s offer for Pure highlights the strategic value of coal-seam gas reserves in Queensland.”

Shares Rise

Pure Energy, also based in Brisbane, added 13 cents, or 1.6 percent, to A$8.25 in Sydney trading to match the BG offer. Arrow Energy advanced 2 percent to A$2.61.

Royal Dutch Shell Plc, Arrow’s Australian partner in coal- seam gas, said yesterday it sold its stake in Pure to BG. BG said Feb. 27 it would increase its offer of A$8 a share, or A$995 million, to A$8.25 should it get 90 percent acceptances by the close.

The proceeds from the sale of Arrow’s stake in Pure will take cash reserves to more than A$700 million and will help develop the 70 trillion cubic feet of estimated resources held in Arrow’s acreage in Queensland, Davies said in the statement.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net Eduard Gismatullin in London at egismatullin@bloomberg.net

Last Updated: March 24, 2009 13:38 EDT