smh article - fyi

Shell 'key' to BG gas bidClancy Yeates
February 11, 2009
EXPECTATIONS are building that Shell, which has kept its foray into Australian coal seam gas notably modest, could unveil expansion plans in response to BG Group's takeover bid for Pure Energy.

Analysts yesterday said BG's cash bid of $6.40 for Pure, made on Monday, was a spoiling tactic to hamper a joint-venture between Shell and Arrow Energy.

BG's bid blocks a $5.39 cash-scrip bid Arrow has made for Pure and sets the scene for a showdown over the minnow explorer. Arrow already owns 20 per cent of Pure, while Shell owns 11.7 per cent, which it previously said it would sell into Arrow's offer.

Market-watchers say Arrow is too small to engage in a bidding war with BG, but the oil major Shell might pounce on the chance to step up its local presence.

A Citigroup analyst, Di Brookman, revealed "intelligence" that Shell had bought land on Curtis Island, where three other joint-ventures are planning to build multi-billion dollar liquefied natural gas plants to export the region's resources.

Arrow and Shell have already secured a site for their LNG plant at nearby Fisherman's Landing, but grabbing extra land could be an early step in grander plans. Shell has neither confirmed nor denied the report's accuracy.

Ms Brookman noted BG's bid offered 32c a gigajoule for Pure's proved, probable and possible reserves, compared with the 72c a gigajoule BG paid last year when it bought Queensland Gas.

"We conclude that the stakes just got higher in this game, as all eyes now turn to Shell to see what it will do, if anything," Ms Brookman said.

BG, Shell and Arrow could all keep their stakes in Pure but a resource-sharing agreement would be unwieldy.

After previously recommending Arrow's takeover bid, Pure's directors are taking legal advice on the BG offer. But in a sign investors expect more activity, Pure shares yesterday jumped 28 per cent, or $1.48 to $6.76.