Royal Dutch Shell, Europe's second-biggest oil company, and PetroChina have made a $3 billion joint bid for Australian coal-seam gas producer Arrow Energy. Arrow said its shareholders would receive $4.03 in cash and stock in a new company that would focus on Arrow's international business.
Shell (RDS-A) and PetroChina would jointly own and operate the new company. Arrow has already announced its intention to publicly float its international business, the Wall Street Journal reported.
The offer is non-binding and at least one analyst has speculated Shell and PetroChina (PTR) may need to boost their offer to ensure the deal gets done. Arrow Energy has hired Citigroup (C) and UBS (UBS) as advisors.
Shell already holds a 30% stake in Arrow's domestic coal seam gas assets as well as a 10% share in its international business, according to Reuters. International energy firms have made $20 billion in investments in Australia's natural gas industry since 2008 on the back of soaring demand from Asian customers.
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