Sarah Belfield - Reporter and writer, freelance

s a r a h b e l f i e l d

reporter & writer, freelance

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ARROW NOW UNRECOGNISABLE GIANT

(Oil & Gas Gazette, September 2006)

THOSE market-watchers lucky enough to have been away on an extended winter vacation could be forgiven for barely recognising Arrow Energy upon return.

Arrow moved to compulsorily acquire outstanding CH4 Gas shareholdings in late July following the friendly takeover, which established Australia's largest independent coal seam gas producer with a market capitalisation set to reach around $290 million from the pre-merger Arrow's $146 million at the end of the March quarter.

Arrow said it expected to have a "fully prepared and functionally integrated organisation" by the end of August. The company also planned to refine and start implementing its "merged entity strategy" during the September quarter.

The merged entity's senior management team now includes chairman John Reynolds, chief executive and managing director Nick Davies, chief operating officer Andrew Purcell, chief financial officer and company secretary Kerry Parker and chief commercial officer Shaun Scott. Stephen Bizzell, Paul Elkington, Jeremy Barlow and David Williamson also joined as directors.

Also on the Arrow board will be David Williamson, a director of Ipswich-based thermal coal producer New Hope Corporation, which acquired a portion of Macquarie Bank's interest in Arrow on July 26 in a cash transaction worth about $48.5 million. New Hope said the new stake provided an expanded energy portfolio which is complementary to its domestic coal energy business.

At the time, New Hope said it had no intention of increasing its interest in Arrow beyond where it sat at 19.9%, and its interest has now eased to 18.3% following the issue of remaining shares to CH4 shareholders, according to Arrow.

Arrow, in turn, took a $1 million stake in coal seam gas explorer and ASX-hopeful Pure Energy Resources, which was looking to list in September via a $5 million initial public offering. For its money, Arrow acquired nine million Pure Energy shares and the same number of 30-cent options. If all of those options were exercised, Arrow would hold a roughly 25% interest in Pure Energy, from 14% initially.

Arrow also shook hands with Pure Energy over a farm-in agreement that includes earning up to a 50% interest in either ATP 758 or ATP 759, which adjoin Arrow's 50%-held Moranbah gas project.

The Australian Pipeline Trust also figures prominently in Arrow's life. The two companies have completed a heads of agreement over the funding, ownership and operation of the Tipton West gas processing and pipeline facilities.

Final negotiations were underway towards a hoped-for completion in the near term. Meantime, development of the Tipton West project within ATP 683P's Dalby Block and Pl 198 (60%) was progressing at a rapid pace. Seventeen of 29 drilled wells were on pump as at June 30.

Australian Pipeline Trust was also involved in a gas tolling agreement concerning the ownership and operation of the Daandine power station facility. With all 15 development wells completed by the end of June, an August start to production was scheduled at Daandine (100%).

On the production and exploration front, the ramp-up of coal seam gas production continued at the Kogan North field (50% and operator) in the Surat Basin, with a view to reaching sales rates of four petajoules per annum in early 2007.

Arrow reported cash of $26.9 million at the end of the June quarter. While the company spent about $12.2 million on development during the June quarter, it received about $14.1 million for farm-outs or joint ventures.

CH4, which made separate stock-exchange filings for its June quarter results, reported operating cashflow receipts of $4.3 million. Net cashflow from operations and investments was a $4.98 million deficit, but net inflows from financing activities saw cash at bank decrease by only $55,000 to $2.89 million. The company had anticipated cash outflows of about $5.1 million in the September quarter.

During the June quarter, Moranbah production grew to about 45 terajoules of gas per day, while joint venture partner BHP Billiton sold its 50% interest to AGL Energy for an estimated $93 million. Moranbah produced 3,950 TJ during the quarter.

CH4's securities were suspended from quotation on the Australian Stock Exchange on August 4.

s a r a h b e l f i e l d reporter & writer, freelance

About Services Clips Ideas Contact	Sample clip ARROW NOW UNRECOGNISABLE GIANT (Oil & Gas Gazette, September 2006) THOSE market-watchers lucky enough to have been away on an extended winter vacation could be forgiven for barely recognising Arrow Energy upon return. Arrow moved to compulsorily acquire outstanding CH4 Gas shareholdings in late July following the friendly takeover, which established Australia's largest independent coal seam gas producer with a market capitalisation set to reach around $290 million from the pre-merger Arrow's $146 million at the end of the March quarter. Arrow said it expected to have a "fully prepared and functionally integrated organisation" by the end of August. The company also planned to refine and start implementing its "merged entity strategy" during the September quarter. The merged entity's senior management team now includes chairman John Reynolds, chief executive and managing director Nick Davies, chief operating officer Andrew Purcell, chief financial officer and company secretary Kerry Parker and chief commercial officer Shaun Scott. Stephen Bizzell, Paul Elkington, Jeremy Barlow and David Williamson also joined as directors. Also on the Arrow board will be David Williamson, a director of Ipswich-based thermal coal producer New Hope Corporation, which acquired a portion of Macquarie Bank's interest in Arrow on July 26 in a cash transaction worth about $48.5 million. New Hope said the new stake provided an expanded energy portfolio which is complementary to its domestic coal energy business. At the time, New Hope said it had no intention of increasing its interest in Arrow beyond where it sat at 19.9%, and its interest has now eased to 18.3% following the issue of remaining shares to CH4 shareholders, according to Arrow. Arrow, in turn, took a $1 million stake in coal seam gas explorer and ASX-hopeful Pure Energy Resources, which was looking to list in September via a $5 million initial public offering. For its money, Arrow acquired nine million Pure Energy shares and the same number of 30-cent options. If all of those options were exercised, Arrow would hold a roughly 25% interest in Pure Energy, from 14% initially. Arrow also shook hands with Pure Energy over a farm-in agreement that includes earning up to a 50% interest in either ATP 758 or ATP 759, which adjoin Arrow's 50%-held Moranbah gas project. The Australian Pipeline Trust also figures prominently in Arrow's life. The two companies have completed a heads of agreement over the funding, ownership and operation of the Tipton West gas processing and pipeline facilities. Final negotiations were underway towards a hoped-for completion in the near term. Meantime, development of the Tipton West project within ATP 683P's Dalby Block and Pl 198 (60%) was progressing at a rapid pace. Seventeen of 29 drilled wells were on pump as at June 30. Australian Pipeline Trust was also involved in a gas tolling agreement concerning the ownership and operation of the Daandine power station facility. With all 15 development wells completed by the end of June, an August start to production was scheduled at Daandine (100%). On the production and exploration front, the ramp-up of coal seam gas production continued at the Kogan North field (50% and operator) in the Surat Basin, with a view to reaching sales rates of four petajoules per annum in early 2007. Arrow reported cash of $26.9 million at the end of the June quarter. While the company spent about $12.2 million on development during the June quarter, it received about $14.1 million for farm-outs or joint ventures. CH4, which made separate stock-exchange filings for its June quarter results, reported operating cashflow receipts of $4.3 million. Net cashflow from operations and investments was a $4.98 million deficit, but net inflows from financing activities saw cash at bank decrease by only $55,000 to $2.89 million. The company had anticipated cash outflows of about $5.1 million in the September quarter. During the June quarter, Moranbah production grew to about 45 terajoules of gas per day, while joint venture partner BHP Billiton sold its 50% interest to AGL Energy for an estimated $93 million. Moranbah produced 3,950 TJ during the quarter. CH4's securities were suspended from quotation on the Australian Stock Exchange on August 4.
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