Arrow Energy announces the execution of a broad-ranging agreement with the Government of the Xinjiang Autonomous Region (X.A.R.) of the People's Republic of China (PRC).
Arrow has recognised the extensive Coal Bed Methane potential of the X.A.R. (an area covering 1,660,001 km² with 40% of the country’s coal resources) and has been working with the Regional Government to assess and evaluate this potential.
To capitalise on this potential, Arrow Energy has signed a co-operative joint venture agreement with Urumqi Geological and Exploration Development Company of Xinjiang Geological Survey (UGC) of the PRC. The agreement details the setting up of an 80% Arrow, 20% UGC Sino-Foreign co-operative joint venture company based in Fukang City, Changji Autonomus State with the intent of prospecting and exploiting CBM resources throughout the X.A.R.
The joint venture will focus on identifying opportunities where CBM can be commercially exploited prior to coal mining operations with the intent of adding value, providing environmental benefit and assisting issues relating to coal mine safety within the context of newly developing regulations in China.
Arrow moves to 100% ownership of Arrow Global CBM
Arrow has exercised its option to acquire a further 50% interest in Arrow Global CBM Pty Ltd (Global CBM) taking Arrow’s shareholding interest to 100%.
Global CBM holds the recently signed PSC in Vietnam and has numerous agreements with respect to coal bed methane (CBM) assets in China and Indonesia.
Arrow initially acquired a 50% interest in Global CBM in January 2007 and at the time of its initial investment Arrow entered into option arrangements to acquire the remaining 50% shareholding. Under the agreement entered into, Arrow will acquire the 50% interest for the issue of 4,624,188 Arrow ordinary shares and 5,000,000 options to acquire Arrow ordinary shares exerciseable at $3.00 expiring 31 December 2010. Of the consideration to be paid to the Global CBM shareholders, the issue of 924,838 shares and 1,000,000 options are to an entity associated with David Mathew, an executive of Arrow International and the issue of 1,040,442 shares and 1,125,000 options are to an entity associated with Jeremy Barlow, a director of Arrow. David Mathew and Jeremy Barlow were the co-founders of CH4 and Global CBM. The issue of shares and options to the entity associated with Jeremy Barlow will be subject to obtaining necessary shareholder and regulatory approvals.
Nick Davies, Arrow’s CEO commented that “these two transactions signify another important step in the evolution of Arrow’s International business. Developing Arrow’s strategic position in the resource rich Xinjiang region of China through working in partnership with local stake-holders is a key plank of our strategy. The move to gain 100% control of the Global CBM business has also been a long-planned move. With drilling about to start in India and with planning for our first wells on our new Vietnam PSC underway we continue on our planned trajectory of achieving in-country businesses to match Arrow’s Australian business”