Arrow Energy (AOE) is one of Australia’s largest coal-seam gas producers, with operations primarily based in Queensland, and is one of the stocks to watch at the moment.
In addition to supplying locally, AOE’s alliance with Royal Dutch Shell allows it supply gas to the major Asian markets.
With natural gas reserves depleting, interest from energy consumers like China and India is shifting to coal-seam gas. With Australia’s abundant reserves of coal-seam gas, AOE is in a good position to benefit from this.
AOE yesterday received a joint takeover proposal from Royal Dutch Shell and PetroChina.
The $3.26 billion cash offer values Arrow Energy at $4.45 a share, which represents a 28% premium over Friday’s last trading price of $3.48.
The bid is for Arrow Energy’s international business, which Arrow had already flagged as a potential public float on the Singapore or Hong Kong stock exchanges.
The interest shown by international giants, Royal Dutch Shell and PetroChina, suggests there is good value in the Arrow’s assets, and as such it is currently one the key energy stocks to watch.