Shell, PetroChina $3.1 Billion Takeover Approved by Arrow Energy Holders

Arrow Energy Ltd. shareholders approved a A$3.5 billion ($3.1 billion) takeover by Royal Dutch Shell Plc and PetroChina Co., giving the buyers reserves to feed an Australian liquefied natural gas venture.

Shareholders also backed the spinoff of Dart Energy Ltd., a new company that will hold Arrow’s overseas gas assets and stakes in Australian-listed companies, the Brisbane-based company said in a statement to the stock exchange in Sydney today. The transactions need Australian federal court approval.

The Shell and PetroChina deal is even more attractive after Australia proposed a new tax on resource projects and Environment Minister Peter Garrett deferred a decision to approve rival LNG ventures proposed by Santos Ltd. and BG Group Plc, said Shaun Scott, Arrow’s chief executive officer.

“The environment has changed,” Scott said in a phone interview from Brisbane today. “What has been highlighted in the last few months is that there’s a lot more risk. At the end of the day the reality is that big projects are better off in the hands of big companies like Shell and PetroChina.”

Shell plans to build the Curtis Island LNG project, which would convert gas extracted from coal seams into liquid form for export. The venture is one of more than a dozen in Australia aimed at tapping rising Asian demand for the fuel.

Environmental Concerns

Garrett extended a review of the Santos and BG projects to Oct. 11, spokesman Ben Pratt said today. While Queensland has cleared the ventures, the state government raised concerns about their environmental impact.

Arrow rose 0.4 percent to A$4.99 in Sydney trading, valuing the company at about A$3.67 billion, while the benchmark S&P/ASX 200 Index climbed 1.9 percent. Investors will get one Dart share for every two Arrow shares. Arrow’s closing price today gives Dart an implied value of 58 Australian cents a share.

Dart’s management team has spent a week each in Australia, Asia, Europe and the U.S. pitching the new company to potential shareholders, Scott said.

“We’re in the early stages of educating people about the potential of the Dart portfolio,” he said. “It’s no different from where Arrow was three or four years ago.”

China’s National Development and Reform Commission has cleared the Shell-PetroChina acquisition, Arrow said today. Dart is set to begin trading July 22, with the Shell and PetroChina takeover due to be implemented Aug. 23, Arrow said.

Shell and PetroChina plan to invest the funds required to develop a “world-scale LNG plant” on Curtis Island as they continue to work with Arrow to complete the deal, the companies said in a statement today after the shareholder vote. A hearing on the takeover is scheduled in Australian federal court July 29, Shell said.

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.