Strange that nobody mentioned this in this forum. The part that...

Strange that nobody mentioned this in this forum. The part that interest me most is that The market here is not giving it (Arrow International) any value at all, and that the IPO will likely to take place in Hong Kong or Singapore. If successful, the IPO will redefine the value of Arrow International and that may add a few bucks to the share price of AOE. Just can't understand why are there still so many sellers at the current price?

Arrow Energy Plans International Unit IPO in Pivotal Year
Share Business ExchangeTwitterFacebook| Email | Print | A A A By James Paton

Feb. 17 (Bloomberg) -- Arrow Energy Ltd., the Australian coal-seam gas producer, seeks to transform itself this year by selling shares in an international unit and approving the Fishermans Landing project in the state of Queensland.

Arrow plans to offer as much as 20 percent of its international business in a share sale in the second half of 2010, the Brisbane-based company said today. The initial public offering could take place in Hong Kong or Singapore, it said.

This is a pivotal year for us that really launches us toward substantial growth, Shaun Scott, chief executive officer of Arrows Australian business, said in a call with reporters.

Arrow, which is drilling in India, China, Indonesia and Vietnam, aims to boost gas production tenfold by 2015. In Australia, its Fishermans Landing venture is one of six proposed liquefied natural gas projects scheduled for final approval in 2010. The Queensland venture plans to tap gas extracted from coal seams for conversion to liquid form and export to Asia.

Fishermans Landing may cost as much as A$2.2 billion ($2 billion) to develop, Arrow said this month. The company has reached an agreement with Liquefied Natural Gas Ltd. to buy 100 percent of the venture.

Arrow may delay a decision to approve the development until the middle of 2010, analysts have said. To finance the venture, the Australian explorer may sell a stake, take on debt, sell shares or find an investor, the company said Feb. 2.

Shells Stake

Arrow gained 2.8 percent to A$3.64 in Sydney today, compared with the advance of 2.2 percent in the benchmark S&P/ASX 200 Index.

Arrow may keep 70 percent of the international unit if an initial share sale proceeds, Scott said. Royal Dutch Shell Plc in 2008 acquired 10 percent of the international unit and 30 percent of Arrows Queensland coal-seam gas holdings.

The businesses in most of the Asian countries could be at least as large and profitable as its Australian operations within six years, Arrow said today. Scott declined to value the unit.

The market here is not giving it any value at all, Adrian Wood, an analyst at Macquarie Group Ltd. in Sydney, said by phone today. With a public offering, suddenly there is a very transparent valuation, he said.

A 50 percent stake in Arrows international operation is worth at least A$380 million and probably much more, said John Young, an analyst at Wilson HTM Investment Group in Melbourne. It is potentially a multi-billion dollar business, he said. Shell has the option to boost its stake to 50 percent, he said.

Different Company

An IPO for part of the overseas division may raise money to help the company move toward production in Asia, spokesman Andrew Barber said today.

Arrow will become a different company by the end of 2010, it said in a presentation filed to the stock exchange today.

A 50 percent increase in its Australian reserves may help support growth options including a potential second processing unit at Fishermans Landing and the supply of gas to Shells proposed Curtis Island LNG project, Arrow said in January.

Chief Executive Officer Nick Davies said today that Arrow aims to increase proven and probable reserves by 1,500 petajoules each year. Scott is succeeding Davies as Arrows CEO, while Davies is replacing John Reynolds as chairman, the company said in a statement earlier this month.

To contact the reporter on this story: James Paton in Sydney [email protected].

Last Updated: February 17, 2010 01:06 EST