Australian Dart Energy Acquires Apollo Gas
Australian coalbed methane producer Dart Energy took another step closer toward its aim of becoming the world's first global CBM company on Tuesday when it launched a friendly all-scrip takeover offer for CBM explorer Apollo Gas that values the latter at A$126 million ($121 million).
Dart's offer comprises 3 Dart shares for every 4 Apollo shares and 3 comparable Dart options for every 4 Apollo options, giving an implied value to Apollo of A$0.79/share, the two companies said in a joint statement. It represents a 29% premium to Apollo's closing price of A$0.61/share on Friday and a 32% premium to its average price over the previous 30 days of trading.
Both Dart and Apollo suspended trading in their shares on the Australian Securities Exchange before the start of trade Monday pending the announcement. Apollo said its directors and major shareholders, who hold a total 54% of the company's shares, intend to accept the offer in the absence of a superior proposal and described it as a "win-win" for both Dart and Apollo shareholders.
Dart was spun off in July from Australian CBM producer Arrow Energy, which was acquired for A$3.4 billion by Shell and PetroChina. The two giants were primarily interested in Arrow's gas resources in the state of Queensland to feed their planned 7-8 million mt/year LNG project on Curtis Island in Gladstone. This left Dart with Arrow's 90% stake in its international CBM assets in China, India, Vietnam and Indonesia, and several Australian assets including a 21.04% stake in Apollo and farm-in rights to Apollo's exploration license PEL 458.
Apollo owns seven CBM exploration permits in New South Wales spanning 24,000 sq km of the Sydney-Gunnedah Basin near existing and planned gas transmission pipelines and gas-fired power stations. PEL 458 in the basin recorded a potentially commercial contingent CBM resource in June of 1.34 billion cubic feet of gas in place for 542 Bcf gross and 299 Bcf net. "The acquisition of Apollo is a logical move for Dart and is consistent with our Australian strategy laid out at the time of the demerger of Dart from Arrow Energy -- to grow big, grow fast," Dart managing director Simon Potter said in the joint statement. "We see in Apollo ... extensive gas resources capable of near-term commercialization with access to an ever increasing gas market." The Apollo takeover is Dart's third major announcement in a month. It signed a gas sales agreement for pilot production at its Liulin field in China on September 8, taking it a step closer toward delivering one of China's first commercial CBM projects.
On September 3 it acquired a 10% stake in European CBM operator Composite Energy for $7 million, with the option to increase its stake to 20% by January 31, 2011, for an extra $5 million and to 100% before June 30, 2011, for another $56 million. Dart said its funds in that deal will be used to progress Composite's CBM business in Europe, including securing new licenses, ongoing work at Composite's 15 existing CBM licenses in the UK and its two in Poland, and the evaluation of shale gas potential in several Composite license areas. The Apollo takeover is targeted for completion on December 2.