Arrow shares soar 40% on takeover bid

Royal Dutch Shell and PetroChina have made a joint bid for Arrow Energy in a deal worth at least $3.3 billion, as they seek a slice of the booming coal seam gas sector.

Shares in Arrow Energy jumped more than 40 per cent to a record high on the news, and were recently trading 41.4 per cent higher at $4.92.

Arrow said this morning that the non-binding, conditional bid from a company jointly owned by Royal Dutch Shell and PetroChina would give shareholders $4.45 of cash per share plus a share in a new entity comprised of Arrow's international business.

The move would be the latest move by major energy firms into Australia's coal seam gas sector, after energy majors such as BG Group, ConocoPhillips and Petronas, already pumped in about $20 billion since 2008, with the aim of converting the abundant gas resource into higher-valued liquefied natural gas (LNG) for export into Asia.

The bid was likely sparked by Arrow's decision last month to acquire the full ownership of its $2.2 billion Fisherman's Landing LNG project, which will be fed by coal seam gas, the Australian Financial Review reported today.