Arrow Energy says it’s still talking to Shell and PetroChina about their joint unsolicited offer. LNG Ltd says it and Arrow have agreed to a sort of trial separation, if yesterday’s update from LNG is any guide.
LNG promised the statement on Monday after asking for its shares to be suspended because the $3.5 billion Shell/PetroChina bid for Arrow could impact the sale of the Fisherman’s Landing LNG plant site at Gladstone in Queensland.
That was the more substantive; Arrow’s was shorter, confirming the postponing of the signing of the final agreement on Fishermen’s Island and revealing the ongoing talks with its would-be suitors:
"Arrow continues active discussions with Shell and PetroChina over their Proposal. In light of this, Arrow and LNG Ltd have agreed to extend the HoA (Heads of Agreement) until 30 June, 2010," Arrow said.
Yesterday’s statements suggest that LNG can look at possible alternative partners for the development of its Gladstone LNG project in the wake of the bid for Arrow Energy.
We are still awaiting the official Arrow response to the Shell/PetroChina bid.
So far all the rumors have been in the negative from the Arrow stance; yesterday’s was non-committal.
Under the renegotiated agreement with Arrow, LNG says it will now be able to freely explore all gas supply opportunities and project structure options with other parties, LNG said.
LNG said the terms of the sale of its Fisherman’s Landing project in Queensland to Arrow Energy has been changed to allow either party to terminate the agreement with one day’s notice.
The status of the $US51 million sale has been under a cloud since earlier in March, when Royal Dutch Shell and PetroChina made a non-binding, indicative takeover bid for Arrow worth at least $3.3 billion (or $4.45 a share in cash) last week.
While the company is disappointed that the Arrow Sale transaction has not yet been finalised, Arrow said, "The revised Heads of Agreement will enable the Company to actively appraise all other opportunities (no longer restricted to solely dealing with Arrow) for the development of the Gladstone LNG Project",
"Given the definitive agreements have not been concluded with Arrow, the Gladstone LNG Project still remains 100% owned and controlled by the Company through its wholly owned subsidiary "Gladstone LNG Pty Ltd".
"The Company remains of the view that the Gladstone LNG Project site at Fisherman’s Landing, the mid-scale nature of the LNG plant and all the work undertaken to date, renders the Gladstone LNG Project well placed to be successfully developed and commercialised, in a much shorter time frame than other, much larger, LNG projects proposed by others in the Port of Gladstone.
"The Gladstone LNG Project remains uniquely positioned in that all key environmental, development and license approvals have either been received, or are expected to be received, within the next four weeks.
"Given Arrow’s decision to place the Gladstone LNG Project Sale transaction on hold, and pending the Company’s appraisal of all other gas supply and project ownership and structuring opportunities, the Company has placed the ongoing early site works on hold.
"However, such work can be readily reactivated if the proposed Sale to Arrow is finalised or the Company enters into alternative gas supply and project structure agreements with other parties.
"The Company still considers the Sale to Arrow has the potential to provide real benefits to the Company’s shareholders and will endeavour to continue to work with Arrow to conclude the transaction.
"However, these potential benefits will now be assessed against other gas supply and project structuring opportunities, with the securing of alternative committed gas supply to the Gladstone LNG Project being the Company’s primary focus, while the Sale to Arrow remains on hold.
"Given the above position in relation to the Gladstone LNG Project, the Company will not be extending the term (which expires 15 March 2010) of the Heads of Agreement with Golar LNG Energy Limited, which relates to the sale and purchase of LNG produced by the first LNG train of the Gladstone LNG Project.
"However, under the terms of the June 2006 Collaboration Agreement, between the Company and Golar, the two companies will continue to work closely together."
The market wasn’t disappointed. LNG shares ended up 2.9%, or 1.5c, at 52.5 cents after touching 60c in early trading. Arrow shares fell 2c to $5.23.
