Arrow Energy (ASX:AOE): Rising Demand in Aussie LNG

Big news: Arrow Energy (ASX:AOE), a modest energy producer, received a $3 billion takeover bid yesterday. Why was this benchwarmer story the leadoff hitter in today’s 5 Min. Forecast? Ahh, the drama’s in the details…some big trends in the making here:

First, Arrow is in the Australian natural gas business. Chris Mayer specifically gave you a heads-up on Aussie LNG just a few weeks ago in his essay “Liquid Natural Gas: The Next Resource Boom”. It’s the real deal.

Second, the bidders: Royal Dutch Shell and state-owned PetroChina have teamed up for the buyout. Royal, one of the biggest companies in the world, wants the bottomless bank account and political swagger of the world’s most powerful government – that’s China.

And the Chinese, as evidenced by their failed deals with Rio Tinto and Woodside Petroleum, want access to Aussie resources – badly. Those two failed ventures – both with a fair share of controversy – explain the collaboration with Shell. Lord knows China doesn’t need the money.

Heh, and last: America can still export something. Citigroup was the main financial adviser.

Addison Wiggin
for The Daily Reckoning

The Daily Reckoning