Arrow Energy has taken a further giant stride on its path to becoming the first global coal seam gas company following the execution of definitive agreements with energy major Royal Dutch Shell.

Shell Exploration Company B.V. (Shell), a subsidiary of Royal Dutch Shell PLC, has now executed definitive agreements to acquire 30 percent of Arrow’s interest in its Australian upstream tenements and a 10 percent stake of Arrow International Pte Ltd which holds all of Arrow’s international assets for up to A$915 million. There have been no material changes to the terms or conditions agreed in the original memorandum of understanding (MOU) signed between Arrow and Shell on 2 June 2008 other than an increase in the total transaction value in Australian dollar terms by A$140 million due to currency movements since the time of execution of the memorandum of understanding.

Arrow Energy Chief Executive Officer, Mr Nick Davies, said that the two companies had been working closely together since the deal’s announcement to complete requirements for execution of the definitive agreements.

“I am very pleased with the way that the teams from both companies completed the requirements to get these agreements finalised. The level of co-operation between the teams and the speed at which this was finalised bodes well for the future of our alliance with Shell,” Mr Davies said.

“Both Shell and Arrow will now work together to deliver the value from our vast Australian coal seam gas interests as well as move forward with our international opportunities.

“This is an exciting time for Arrow Energy as we continue to progress monetisation of our substantial gas resources through our liquefied natural gas (LNG) opportunity as well as the current development of our third gas-fired power station in south-east Queensland. At the financial close of the transaction, following receipt of remaining regulatory and other approvals, Arrow Energy’s current capital plan will be fully funded through to early 2011,” he said.

Tags: Arrow Energy Ltd, Shell