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Fresh from building a strong domestic base in the Australian state of Queensland, coal seam gas producer Arrow Energy NL is now targeting a global expansion with the aim of becoming Asia’s technical partner of choice.
After listing on the Australian stock market in August 2000, the Brisbane-based company has grown its market capitalisation to over A$1.2 billion and is set to supply Queensland with 25 per cent of its gas needs by the end of 2007.
Chief executive Nick Davies has outlined a three-part expansion strategy for the ambitious energy company.
“The first goal is to execute an outstanding Australian base business - this means growing our production and business to such an extent that we will be making 60 petajoules per annum by 2010,” he said.
“I want to emphasise that the real effort of the company at the moment is going into executing that base business.”
He added, “We also said that we would look at new business with higher margins, both in product selection – gas to liquids, LNG [liquefied natural gas] or CNG [compressed natural gas] – and internationally, where we’re looking at the high-growth, high-population countries of Asia.”
The lure for Arrow is the higher gas prices obtainable in overseas markets compared to its domestic market.
“In India they’re in the range of US$6-$11 per MCF [thousand cubic feet of gas], while in Indonesia and China they’re in the $3.50-$4.50 range, compared with something substantially less than that in Australia,” he said.
The first big Asian deal won by Arrow was the award of three CBM (coal bed methane) exploration blocks in India’s CBM III licensing round, announced in October 2006.
The potential resource in those blocks as assessed by the Indian government is about 10 trillion cubic feet of gas, Mr Davies said.
Arrow won the blocks as part of a consortium with leading Indian gas company Gas Authority of India (GAIL), Indian power company Tata Power Limited and Sweden’s Energy Infrastructure Group (EIG).
“These companies have all been considering for some time a reciprocal investment in our assets in Australia,” Mr Davies said.
“EIG recently committed to spend up to $225 million on our exploration assets. The logic is that we have a huge exploration portfolio in Australia with 90,000 square kilometres of acreage, and most of it has not had any value attributed to it because it’s still in an exploration phase.”
Arrow followed up its India deal with two new agreements in Indonesia, which has estimated coal seam gas reserves of over 400 trillion cubic feet of gas.
Mr Davies said in Sumatra alone there is likely more than 200 TCF, and in the basin targeted by Arrow in South Sumatra around 100 TCF.
“Of the two agreements we’ve signed, one of them is with [PT] Sugico Graha, a coal company that owns the coal tenements, and the other is with PT Medco Energi, one of the largest oil and gas independents in Indonesia,” he said.
“Between the three of us we have a fairly powerful grouping in that South Sumatra basin.”
China is another Asian country with huge CBM resources and Mr Davies said Arrow was looking at a number of basins in the emerging economic superpower.
“The great thing about China is that there are many, many demand sources all over the country.
“Even in the west of China, where we’re looking at some blocks, the major city there has over 4 million people. So there’s local demand everywhere you go, and there’s widespread coal resources too,” he said.
Using subsidiary Arrow Global CBM Pty Ltd, Arrow plans to add further CSG assets to its portfolio in China, India, Indonesia and Vietnam. The goal is then to list the international assets on an overseas stock exchange, with Arrow retaining a strategic stake.
“We’d like to get exposure of our overseas assets to an overseas market because generally there seems to be more recognition of assets in Asia, particularly for the high-growth countries, on some of the overseas markets,” he said.
“So we think the potential is there to expose a lot of the value that we see internationally by listing on an overseas market.”
The CEO said the company had enjoyed four stages of growth in its young history, and was now entering the fifth and probably biggest stage in expanding offshore.
“The four stages so far have been building land position, which we did during the early years; building reserves, by getting them certified; building projects, and actually getting things online; and then last year the focus was on building size through our merger with CH4 [Gas Limited].
“So those are the four stages of growth so far and now we’re just entering the fifth stage of growth which I believe could be the biggest of all, which is our international expansion.
We have a number of projects already that are going to fit into that portfolio, and we see that as a huge growth avenue for the future.”
Copyright Starlink MediaTM
After listing on the Australian stock market in August 2000, the Brisbane-based company has grown its market capitalisation to over A$1.2 billion and is set to supply Queensland with 25 per cent of its gas needs by the end of 2007.
Chief executive Nick Davies has outlined a three-part expansion strategy for the ambitious energy company.
“The first goal is to execute an outstanding Australian base business - this means growing our production and business to such an extent that we will be making 60 petajoules per annum by 2010,” he said.
“I want to emphasise that the real effort of the company at the moment is going into executing that base business.”
He added, “We also said that we would look at new business with higher margins, both in product selection – gas to liquids, LNG [liquefied natural gas] or CNG [compressed natural gas] – and internationally, where we’re looking at the high-growth, high-population countries of Asia.”
The lure for Arrow is the higher gas prices obtainable in overseas markets compared to its domestic market.
“In India they’re in the range of US$6-$11 per MCF [thousand cubic feet of gas], while in Indonesia and China they’re in the $3.50-$4.50 range, compared with something substantially less than that in Australia,” he said.
The first big Asian deal won by Arrow was the award of three CBM (coal bed methane) exploration blocks in India’s CBM III licensing round, announced in October 2006.
The potential resource in those blocks as assessed by the Indian government is about 10 trillion cubic feet of gas, Mr Davies said.
Arrow won the blocks as part of a consortium with leading Indian gas company Gas Authority of India (GAIL), Indian power company Tata Power Limited and Sweden’s Energy Infrastructure Group (EIG).
“These companies have all been considering for some time a reciprocal investment in our assets in Australia,” Mr Davies said.
“EIG recently committed to spend up to $225 million on our exploration assets. The logic is that we have a huge exploration portfolio in Australia with 90,000 square kilometres of acreage, and most of it has not had any value attributed to it because it’s still in an exploration phase.”
Arrow followed up its India deal with two new agreements in Indonesia, which has estimated coal seam gas reserves of over 400 trillion cubic feet of gas.
Mr Davies said in Sumatra alone there is likely more than 200 TCF, and in the basin targeted by Arrow in South Sumatra around 100 TCF.
“Of the two agreements we’ve signed, one of them is with [PT] Sugico Graha, a coal company that owns the coal tenements, and the other is with PT Medco Energi, one of the largest oil and gas independents in Indonesia,” he said.
“Between the three of us we have a fairly powerful grouping in that South Sumatra basin.”
China is another Asian country with huge CBM resources and Mr Davies said Arrow was looking at a number of basins in the emerging economic superpower.
“The great thing about China is that there are many, many demand sources all over the country.
“Even in the west of China, where we’re looking at some blocks, the major city there has over 4 million people. So there’s local demand everywhere you go, and there’s widespread coal resources too,” he said.
Using subsidiary Arrow Global CBM Pty Ltd, Arrow plans to add further CSG assets to its portfolio in China, India, Indonesia and Vietnam. The goal is then to list the international assets on an overseas stock exchange, with Arrow retaining a strategic stake.
“We’d like to get exposure of our overseas assets to an overseas market because generally there seems to be more recognition of assets in Asia, particularly for the high-growth countries, on some of the overseas markets,” he said.
“So we think the potential is there to expose a lot of the value that we see internationally by listing on an overseas market.”
The CEO said the company had enjoyed four stages of growth in its young history, and was now entering the fifth and probably biggest stage in expanding offshore.
“The four stages so far have been building land position, which we did during the early years; building reserves, by getting them certified; building projects, and actually getting things online; and then last year the focus was on building size through our merger with CH4 [Gas Limited].
“So those are the four stages of growth so far and now we’re just entering the fifth stage of growth which I believe could be the biggest of all, which is our international expansion.
We have a number of projects already that are going to fit into that portfolio, and we see that as a huge growth avenue for the future.”
Copyright Starlink MediaTM
