note the references to AOE looking to do a deal...

note the references to AOE looking to do a deal !!

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Arrow Energy fails to block BG Group taking 29pc stakeFont Matt Chambers | February 27, 2009
Article from: The Australian
ARROW Energy has failed to block rival BG Group taking a 29 per cent stake in coal seam gas target Pure Energy in a sign it is not prepared to better BG's $1 billion cash bid.

In a tussle where both Arrow and BG had previously raised bids in quick succession, Arrow had until yesterday to beat BG's $8-a-share offer, or see a 19 per cent stake in the target held by directors fall to BG.

Brisbane-based Arrow let the deadline slide but chief executive Nick Davies said the company was still considering its options.

He warned Pure shareholders to hold tight and not accept BG's offer prematurely.

"Clearly the bidding ante has been upped (by BG)," Mr Davies said.

He said the BG bid was getting closer to an undisclosed crossover price where Arrow would see more value in cashing in its 20 per cent stake in Pure than acquiring the rest of the company. He also indicated he was ready to engage with BG on their stakes.

"Irrespective of what happens from here, there will have to be some discussion from shareholders about how we'd proceed," Mr Davies said, noting the big stakes Arrow, BG and Shell, with 11 per cent, had in Pure.

There were still some investors betting on a higher offer, however, and Pure shares yesterday closed at $8.15 -- down 2 cents, but still above the BG bid price.

Arrow yesterday announced first-half profit of $241.1 million, up from $14.3 million a year earlier, after booking some of Shell's purchase of 30 per cent of its coal seam gas ground.

Arrow did not give a figure for underlying profit but Credit Suisse estimated it at $2.7 million, well down on $13 million a year earlier and on expectations of $15 million.

"It looks disappointing on sales revenues that were 80 per cent up," Credit Suisse analyst Andrew Williams said. "The result from the electricity segment looks particularly weak."

Executive director Stephen Bizzell said the company could be interested in acquiring Beach Petroleum's stake in the West Tipton CSG joint venture in Queensland, over which Arrow has a pre-emptive right.

Beach this week sought expressions of interest for the stake, which Bell Potter has valued at $298 million.

However, BG Group's current $1 billion cash bid for Pure implies the stake is worth somewhere between $450 million and $1.2 billion, depending on whether 2P or 3P reserves are used.

"It is one of a number of opportunities we're currently weighing up," Mr Bizzell said.

Arrow shares ended 12c higher at $2.69.