Arrow funnels cash to LNG dream
Australian integrated energy player Arrow Energy saw cash flow from continuing operations soar for the half year to 31 December as it boosted electricity generation revenue, but reported a net loss as it ramped up investment in its Fisherman’s Landing liquefied natural gas project.
The company also revived plans to list part of its overseas operations as a separate unit.
Arrow reported gross profit of $13.9 million for the year to 31 December from $2.9 million in the half year to December 2008 as revenues from continuing operations rose to $92 million from $38.9 million previously.
Earnings before income tax, debt and amortisation (which includes revenue from exceptional items) rose to $18.6 million from $2.7 million previously, the company said.
Attributable earnings fell to a loss of $16.27 million, or a loss of $2.25 per share, from a profit of $241.2 million, or 32 cents per share, in the same period in 2008 as expenses almost tripled to $36.4 million.
Cash on hand at the end of the period was $261 million.
Gas production rose in the period to 10.1 petajoules from 9.2 petajoules previously, while proved and probable reserves increased 129% to 6150 petajoules. Proved, probable and possible reserves rose to 18.6% to 11042 petajoules.
Arrow managing director Nick Davies said he expected he expected Arrow’s net production from coalbed methane and conventional gas sources in Australia and Asia to grow to 220 petajoules per annum by 2015.
He said the company was targeting annual growth of proved and probable reserves of 1500 petajoules going forward.
Arrow has launched a $300 million exploration and development programme to prove up CBM resources on the Surat, Bowen and Clarence Moreton basins in Queensland to feed the Fisherman’s Landing CBM-to-LNG project, it said.
It is partnering with Anglo-Dutch supermajor Shell to develop upstream assets in the Surat basin.
The company said earlier this month it would buy out partner LNG Ltd, which had been developing the downstream project to build two liquefaction trains capable of producing up to 3 million tonnes of LNG per year for export to Asian markets. The project will be based at Gladstone on the Queensland coast.
First LNG is expected from the first 1.5 million tpa train in late 2012 and Arrow said it is continuing talks with potential customers Golar LNG and Toyato Tsusho over sales terms.
Capital expenditure in the first phase of the project to 2012 is estimates at between $1.9 billion and $2 billion, Arow said.
A final investment decision on the project is expected at the end of the current quarter.
Arrow also said it had revived plans to float part of its overseas assets.
Analysts told Reuters, the IPO, expected later this year, would allow Arrow's international arm to fund itself separately and free up its cash to focus on delivering the Fisherman's Wharf project.
The Brisbane-based company said it may float 20% of its overseas assets later this year, and plans to list either on the Hong Kong or Singapore stock exchanges.
Shell already owns 10 percent of Arrow's international unit.
"Considering the quality of the overseas partnerships Arrow has and the fact that it already has support from Shell, I think the IPO would get very positive response," said an energy analyst who declined to be identified.
"Its hard to put a value on those assets now as most of them aren't producing yet, but given the acreages and quality of the joint ventures, the IPO could be in the range of $500 million or so."
Shares in Arrow rose 2.8% to A$3.64 by 0412 GMT.
Arrow's overseas operations currently has a total of seven projects in China, India, Indonesia and Vietnam, and it has nine more in the pipeline later this year.
Wednesday 17 February 2010
Upstream
Upstream
APPEA blasts extension of NSW fraccing ban
