Shell and PetroChina have tightened their control on part of the multi-billion dollar Queensland coal seam gas sector with a higher offer for Bow Energy.
An extra 4c a share from Arrow Energy, controlled by Shell and its Chinese partner, won acceptance for the offer from Bow’s board, according to statements issued yesterday.
That’s up from $1.48 a share in the first offer and is 72% higher than before the offer was made in late August. It values Bow at $535 million, up from the original $520 million.
Arrow plans a fourth liquefied natural gas venture in Queensland, on top of the $46 billion of developments planned by BG Group Plc, Santos Ltd. and ConocoPhillips.
Bow had been a possible takeover target since Santos agreed in July to pay about $730 million to buy the shares in Eastern Star Gas that it didn’t already own.
Bow’s board said it was recommending that shareholders vote in favour of the proposal in the absence of a “superior” bid.
"Bow and Arrow have entered into a Scheme Implementation Agreement (“SIA”) in the form attached to this announcement to facilitate the Revised Offer, under which Arrow will acquire all the issued ordinary shares of Bow via a Scheme of Arrangement (the “Proposal” or “Scheme”)," Bow said in yesterday’s statement.
BOW CEO John de Stefani said in yesterday’s statement that the company "has developed its coal seam gas assets successfully to a point where the involvement of a major player is ultimately required to best take the projects to the next step. Arrow is also attracted to the quality of Bow’s staff."
The deal is subject to regulatory approvals in Australia and China, with Bow shareholders due to vote on the deal in December.
Arrow said the deal would allow it to expand the size of its first two LNG processing units.
The company said last month it initially planned to produce 4 million tonnes of LNG a year from each of the first two units.
Bow shares ended at $1.465, up half a cent on the day.
Meanwhile US energy giant Chevron has signed off on its $US 29 billion ($A29.63 billion) Wheatstone liquefied natural gas (LNG) project in a West Australia’s Pilbara region.
Chevron announced final investment approval on the project yesterday, paving the way for construction to begin later this year.
The project site is located south west of Onslow in the Pilbara region.
Chevron and its partners already have the larger $43 billion Gorgon project well under way in the same area.
The first phase of construction of Wheatstone is estimated to cost $US 29 billion and consist of two LNG processing trains with a combined capacity of 8.9 million tonnes a year.
Western Australia Premier Colin Barnett said Chevron’s commitment will create 6,500 jobs at peak construction, and deliver an estimated $17 billion to Australian businesses.
Chevron vice chairman George Kirkland said in the statement that Wheatstone would "raise the bar as Australia’s first LNG hub", initially producing close to nine million tonnes a year with a maximum capacity of 25 million tonnes.
Gorgon will produce 16 million tonnes of LNG a year when running at full pace. Shevron says it is 30% complete and on track to start producing gas in 2014. Wheatstone will follow two years later.
Chevron says the foundation project will be fed with natural gas from the Wheatstone and Iago fields, which are operated by an Australian subsidiary of Chevron in a joint venture with Shell and represents 80% of the plant’s foundation capacity.
"The unique Wheatstone hub concept was developed to provide an infrastructure foundation for the commercialization of Chevron’s vast natural gas resources as well as a destination for third-party gas.
"Under the hub concept, Apache and KUFPEC will provide the remaining 20 percent of the natural gas from their Julimar and Brunello fields.
"Development of the two third-party fields is not included in the estimated project cost," Chevron said.
About 60% of Chevron’s equity LNG off-take is under binding long-term agreements. Discussions are continuing with potential customers about equity agreements and associated planned equity sell-downs to increase long-term sales to more than 80%.
Mr Kirkland said the project could not have come at a "better time or a better place", with the total world energy demand expected to rise 40% by 2030.
He said 60% of that growth in energy demand would be in Asia.
Federal Energy Minister Martin Ferguson said in the statement that the benefits of the project would be felt right across the country with increased government revenue, export income and spending on Australia goods and services.
Wheatstone is a joint venture between Chevron (73.6%), Apache (13%), Kuwait Foreign Petroleum Exploration Company (7.0%) and Royal Dutch Shell (6.4%).
The federal government last week gave Wheatstone environmental approval, putting 70 conditions on it to help protect threatened and migratory species such as dugongs, marine turtles, sawfish, dolphins and whales, and the marine environment.
