ARROW ENERGY LIMITED - ASX: AOE

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Description

QUEENSLAND PROJECTS

Arrow Energy listed on the Australian Stock Exchange in August 2000 and has a current market capitalisation of more than $3 billion. Arrow is now one of Australia’s top 100 publicly-listed companies. Arrow has equity interest in more than 65,000 km2 of coal seam gas exploration tenements close to Queensland’s three key markets – Townsville, Gladstone, and Brisbane. To date, less than 10 percent of this land has been explored. As Australia’s largest coal seam gas acreage holder, the company is now driving growth by investing in downstream projects, export liquefied natural gas (LNG) opportunities and international markets to secure higher margin sales. Our five producing projects currently account for around 20 percent of Queensland’s overall gas production - the Moranbah Gas Project in the Bowen Basin, and the Tipton West, Daandine, Kogan North and Stratheden projects in the Surat Basin near Dalby. The company is also a major particpant in the Ipswich and Clarence Moreton Basins, Styx and Coastal Tertiary Basins, and the Nagoorin Graben Basin. We are expanding our existing fields while advancing a number of highly prospective blocks in reaching our gross domestic production target of more than 100 petajoules (PJ) per year by 2012. The company has the rights to dispatch power from the 230MW Yabulu Power Station in Townsvillle and the 30MW Daandine Power Station near Dalby. Arrow formed a partnership with ERM Power to deliver the 450MW Braemar 2 Power Station in July 2009. Arrow’s net generation capacity is now 488MW. Arrow’s gas infrastructure assets include the Moranbah Gas Processing Facility, and the rights to develop the 440km Central Queensland Gas Pipeline (CQGP) between Moranbah and Gladstone. The company is in the preliminary stages of developing the Surat Gladstone Pipeline which will facilitate the supply of up to 150 PJ/year of gas from the company’s Surat Basin projects to a planned LNG export facility in Gladstone.

INDIA PROJECTS

In August 2006, Arrow was awarded three license blocks in India with Indian Government estimated coal seam resources in excess of 10,000 petajoules (PJ). All three blocks (Raj Mahal, Tatapani-Ramkola, and Mand-Raigarh) are in partnerships with leading Indian gas company GAIL (India) Limited and Energy Infrastructure Group of Sweden. Indian power company, Tata Power Limited, is also a partner in the first two blocks. In May 2008, Arrow drilled its first overseas well at the Tatapani-Ramkola (TR) block as part of a wider exploration program. Eighteen core holes have now been drilled within our two coal seam gas blocks in the State of Chhattisgarh state. Drilling of pilot wells could start as early as January 2010 depending on review of results from the initial drilling program. In January 2009, Arrow Energy signed a Memorandum of Understanding (MOU) with Indian government owned ONGC Limited to cooperate in coal seam gas development. The focus of this MOU will be potential cooperation on existing ONGC blocks from previous coal seam gas licence rounds in India. Following the signing of this general MOU, work will immediately begin to formulate specific commercial agreements on defined coal seam gas assets. Arrow is also currently negotiating with Indian coal mining companies aimed at extracting methane ahead of mining activity in some of the most gassy coal mining areas in Jharia and Bokaro coalfields.

CHINA PROJECTS

Arrow Energy is currently negotiating firm title on five preliminary agreements with a number of major China energy players including PetroChina, Bin County Coal, Shenyang Gas Company, Liaohe Petroleum and Shaanxi Binchang Mining. Agreements cover new exploration, mine de-gassing and farm-in to existing production sharing contracts. Arrow and its partner Binchang Mining Group (Binchang) have completed drilling the first well of its two well pilot drilling program. Well DFS-01-V was successfully completed in June 2009. The well has been equipped and is on pump with the first lateral going through gas desorption. This drilling is part of a Heads of Agreement (HOA) signed with Binchang aimed at developing coal seam gas in an area covering 360km2 of Binchang coal mining licenses in Shaanxi Province, 100km North West of Xi’an, the provincial capital. The area has an excellent coal resource data base and has been explored with close spaced core holes defining a coal resource of 6,000 billion tonnes of coal and an estimated gas in-place coal seam gas resource of greater than 1,000 petajoules (PJ). The current pilot program drilling is to assess the potential for the degassing of the underground mine from the surface and for coal seam gas production - which will have dual benefits of gas production together with improved mine safety. Binchang is funding the program and Arrow has designed and is operating the program using technology it has developed in Australia. Under the terms of the HOA, if commercial volumes of gas are produced from the pilot program, the parties will enter into a formal joint venture to develop coal seam gas over the entire area. Arrow and Petrochina have concluded negotiations for a Production Sharing Contract (PSC) award over the Dajing Block in Xinjiang Province in the north-west of China covering around 4,000 km2. It is envisaged that PSC signing will occur before the end of the year. The company has already commenced full scale planning for exploration operations consisting of 14 wells in the first phase that will start as soon as possible after PSC award. In March 2008, Arrow announced the execution of an agreement with the Government of the Xinjiang Autonomous Region in China which has 40 percent of the country's coal resources.

INDONESIA PROJECTS

In Indonesia, Arrow commenced its first coal seam gas well as part of a wider exploration program near the town of Sangatta in East Kalimantan in November 2009. The effective ownership of the Production Sharing Contract (PSC) permit area is Arrow (24 percent), Ephindo (24 percent) and Pertamina (52 percent). Arrow and Ephindo are jointly operating the block. Further to this project, Arrow is in advanced stages of negotiation for four other potential coal seam gas projects. The company has also entered into a PSC with the Government of Indonesia over the Tanjung Enim block in South Sumatra. We have the majority contractor share of the PSC at 45 percent participating interest, and will be the operator of the block as agreed between its partners. Our partners in the PSC are PT Pertamina EP and PT Bukit Asam (Persero) TBK, each with 27.5 percent participating interests. Arrow Energy (Indonesia) Holdings Pte Ltd, an international subsidiary of Arrow Energy and PT Medco Energi CBM Indonesia, a subsidiary of Indonesia’s leading independent oil and gas company PT Medco Energi Internasional Tbk have also signed a Heads of Agreement defining the terms whereby the two companies will cooperate to explore for and develop coal seam gas over Medco’s 1,889km2 conventional oil and gas PSC working area, the SSE1 Block in South Sumatra. Each company shall have a 50 percent participating interest. Under this agreement, which follows on from an earlier Letter of Understanding between the parties, both companies will now jointly work towards expeditiously negotiating a coal seam gas PSC with the Indonesian regulatory authorities aimed at commencing exploration operations as soon as possible. Arrow has been invited to participate in an Indonesian Government forum tasked with facilitating substantial coal seam gas production by the year 2011. We are the only company exploring for coal seam gas in Indonesia that has a proven track record in coal seam gas production. We believe that commercial gas could be produced in Indonesia as early as 2010 if government regulations were streamlined and barriers to market removed.

VIETNAM PROJECTS

Arrow Energy began exploration drilling on the MVHN-01KT Block in northern Vietnam in January 2009 under a major Production Sharing Contract (PSC) with PetroVietnam, a subsidiary of the Vietnamese Government. Under the terms of the PSC, Arrow will receive a 70% interest in the block which covers 2,743 km2. The block, at its nearest point, is only 100 kilometres from Hanoi and is adjacent to the Thai Binh industrial area. The PSC requires Arrow to drill eight wells on the block over a 12 month period. The company believes the PSC to be a technically and commercially attractive proposition. A conventional gas field has already been developed in this area and gas supply infrastructure is in place.

Mine For

coal seam gas

Location of operation(s)

China, Indonesia, India, Vietnam, Queensland

Australian Basins

Bowen, Surat

Address

Level 19, AM60 42 - 60 Albert Street
BRISBANE, QLD, AUSTRALIA

Phone

+61 7 3012 4400

Email

Website

http://www.arrowenergy.com.au/

Last Updated

06/05/2010