Royal Dutch Shell has made a $A3 billion approach for Australian coal-seam gas producer Arrow Energy, a newspaper has reported.
The oil giant is understood to have discussed acquiring Arrow Energy several weeks ago as part of wider talks about investing further in the Australian company's assets, Britain's Sunday Telegraph said.
"Shell is believed to have made the opportunistic approach during talks about extending its interest in Arrow's coal-seam gas assets," the paper said.
"Although the discussions ended in stalemate, Shell is known to be interested and may return with a revised approach.
"Arrow is being advised by Citigroup and Australian brokers have been in the City over the past few days."
Arrow Energy confirmed talks last week to the Australian Stock Exchange without naming interested parties after being forced to put out a statement due to takeover speculation.
Arrow said: "The company continues to have discussions with parties with respect to the potential monetisation options for its considerable coal seam gas resources.
"It is noted that these discussions have included discussions with respect to potential change of control transactions. However, the company is unaware as to whether any change of control proposal will be forthcoming."
Shell already owns 30 per cent of Arrow's Australian acreage and a 10 per cent stake in Arrow's international unit.
Coal-seam gas is being touted as the next big thing in Liquefied Natural Gas, with Australia rich in the resource and Arrow the largest holder of acreage in the country.
Shell declined to comment.
AOE Price at posting:
$4.30 Sentiment: Buy Disclosure: Held
