Bidding war over Australian gas

By Angela Macdonald-Smith | February 10, 2009, Tuesday |

Print Edition

BG Group Plc, the United Kingdom company seeking to develop a natural gas export project in northeastern Australia, offered to buy Pure Energy Resources Ltd for A$796 million (US$536 million), topping an offer from Arrow Energy Ltd.

The cash offer of A$6.40 a share is 19 percent higher than the value of Australian Arrow's cash and stock bid, based on the last closing price, BG said yesterday in a statement. Arrow jumped 12 percent to A$2.48 and Metgasco Ltd rose 13 percent to 38 cents in Sydney as investors bet that other coal-seam gas stocks may attract bids.

BG and Arrow, Royal Dutch Shell Plc's Australian partner in coal-seam gas, are among companies seeking more reserves to feed planned liquefied natural gas projects. Australia's industry to extract gas from coal seams attracted more than A$17 billion in investment last year as companies such as ConocoPhillips tapped into ventures that could meet demand in Asia for cleaner fuels.

"This underlines that even in this period of doom and gloom there's still strong interest in the energy sector, particularly in the LNG space," said Gavin Wendt, senior resources analyst at Fat Prophets Funds Management in Sydney.

Energy

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Bidding war over Australian gas

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