ARROW STRIKES LATEST ACQUISITION TARGET

Written on the 6 July 2011

ARROW STRIKES LATEST ACQUISITION TARGET

ARROW Energy has taken control of the Braemar 2 power station (pictured) after acquiring the remaining 25 per cent stake from ERM Power for $66.1 million.

The latest purchase further cements the Brisbane-based coal seam gas (CSG) company as one of the state’s largest energy providers, already supplying around 20 per cent of Queensland’s gas supply for conversion into electricity.

Arrow, which is owned by Royal Dutch Shell and PetroChina, provides CSG to the 450 MW Braemar 2 power station from its Daandine and Tipton West gas fields in the Surat Basin.

The open cycle gas turbine power station was built by ERM Power at a cost of $550m and began operating in July 2009. With a peak capacity of 519 MW, the plant is the second biggest gas fired station in Queensland and provides three to four per cent of the state’s electricity.

“While Arrow has been expanding CSG exploration to deliver a major CSG to liquefied natural gas project to meet international demand for cleaner energy, this acquisition shows that providing cleaner energy to Queensland at the same time is of critical importance to the company,” says Arrow Energy CEO Andrew Faulkner.

“Braemar 2 continued to successfully operate through the extreme flooding events in the Surat Basin earlier this year, which ensured on-going electricity generation to the state.”

The power station is located 40km southwest of Dalby and the acquisition includes a 110 km high-pressure gas pipeline network.

Arrow first purchased a quarter stake in Braemar 2 in September 2009 and now fully owns the equity interest in the asset.

ERM Power CEO Phillip St Baker was unavailable to comment today, but a spokesperson for the company told Brisbane Business News that it was agreed back in 2009 that Arrow would eventually acquire total interest in the plant.

After purchasing an additional 50 per cent interest in Oakey Power Station from Redbank Energy Ltd for $61.7 million last month, ERM has demonstrated its shift in corporate strategy to retain interests in power stations.

“ERM was a private company in 2009 when we agreed to sell Braemar 2 to Arrow Energy. Since going public our strategy has shifted as we look to retain at least a 50 per cent stake in any power stations we construct into the future,” says the spokesperson.

ERM Power now owns 62.5 per cent of the Darling Downs Oakey station, as well as 50 per cent of Western Australia’s Neerabup station, 40km north of Perth.

Arrow Energy is a former ASX-listed public company but was delisted when purchased by Shell and PetroChina for $3.44 billion in April 2010.

ERM stock (ASX:EPW) remains steady at $1.57 per share.

 

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