shell makes $3billion approach for arrow, page-9

Wilsons view. Wilsons follow AOE very closely and have a very history of sound research on the company. Makes a lot more sense than some of the rubbish we read from junior finance jouno's trying to rattle up a name for themselves.

Arrow Energy Limited - speculation of takeover offer

Announcement details:

A number of news services have carried a story this morning regarding Shell making a takeover offer for Arrow Energy.
The original story appears to have been published in the UK's Sunday Telegraph on 15th August "Royal Dutch Shell tables £1.5bn bid for Australia's Arrow Energy" (http://www.telegraph.co.uk/finance/newsbysector/industry/mining/6035607/Royal-Dutch-Shell-tables-1.5bn-bid-for-Australias-Arrow-Energy.html).
The article stated "Shell is believed to have made the opportunistic approach during talks about extending its interest in Arrow's coal-seam gas assets. Although the discussions ended in stalemate, Shell is known to be interested and may return with a revised approach." Shell declined to comment.
Last week news articles stated that AOE was being targeted by Chinese interests.






WHTM view:

Initial analysis - We think it is unlikely that Shell made such an offer at this time. We do, however, expect that discussions are continuing between Shell and AOE regarding gas supply for Shell's Curtis Island LNG project, as we have discussed in previous research notes. We expect an announcement regarding the form of this supply before year end.
Earnings implications - No change.
Investment view - Whilst AOE has had discussions with a number of parties with respect to monetizing its CSG resources and that some of these discusions have referred to potential change of control transaction AOE stated that "the Company is unaware as to whether any change of control proposal will be forthcoming". In our view the above speculation points to increased global awareness of the scale and value of AOE's assets and developing CSG business. We retain our Buy recommendation and price target of $A6.60 /share.