One of Australia’s leading energy companies has recommended a takeover by Shell and PetroChina

The board of Arrow Energy has unanimously agreed to a AUS$3.5 billion (£2.1bn) takeover by oil giants PetroChina and Shell.

Arrow, one of Australia’s leading energy companies, rebuffed earlier proposals but said its board is now happy to recommend its shareholders to vote in favour of the joint proposal by PetroChina and Shell, who increased an earlier bid, to acquire 100% of its shares.

CS CSG (Australia) Pty Ltd, the newly-formed joint partnership of the two oil companies, will be entering into the agreement with Arrow and has agreed to pay AUS$4.70 cash per share for all its shares.

Shell’s Chairman in Australia, Russell Caplan, said: “The proposal is good for jobs, good for Queensland and good for the long-term future of the CSG industry in Australia. In addition to the quality of its assets, both Shell and PetroChina are attracted to the quality of Arrow’s employees, all of whom should be proud of the role they have played in building this great company.”

PetroChina and Shell say that the acquisition will bring much-needed expertise in marketing, technical capabilities and project experience which will help facilitate growth in Australia’s coal stream gas (CSG) and liquefied natural gas (LNG) production.

Chairman of Arrow Energy, John Reynolds, said that this is an exciting opportunity: “This transaction crystallises the value of more mature assets that have been built in Arrow’s Queensland business through the rigorous execution of our business strategy.

“In addition, we are creating an exciting opportunity for Arrow Energy shareholders to continue to participate in a portfolio of earlier-stage development assets in Australia and the broader Asian region.”

Arrow shareholders are expected to vote on the takeover at a meeting in July and should they vote for a takeover, will also be offered one share in a new company – Dart Energy Limited – created by a demerger of Arrow Energy’s international business.