'Active talks' continue for Arrow, Shell

SYDNEY - Arrow Energy is continuing "active discussions" with Royal Dutch Shell and PetroChina amid speculation the Australian gas producer may reject their A$3.3 billion ($4.3 billion) bid and seek a higher offer.

Arrow has also extended a preliminary agreement to acquire the entire Fisherman's Landing liquefied natural gas project in the state of Queensland until June 30, the company said in a statement to the Australian stock exchange yesterday.

Arrow shares have risen more than 50 per cent in Sydney trading since the Brisbane-based energy explorer announced on March 8 that Shell and PetroChina offered A$4.45 a share for its Australian business.

The ongoing talks "point toward Arrow trying to get a higher price for the assets, and we'd agree with that," Andrew Williams, an analyst at Credit Suisse, said yesterday.

"The bid as it stands now looks to be on the low side."

The total Arrow business is worth at least A$5.25 a share, Williams said. "That would be where we think the ball game begins."

- BLOOMBERG