The Brisbane-based major told the market yesterday that developments in this farm-in acreage included the producing Daandine project, and the coastal Queensland and Clarence Moreton Basin exploration projects.
But the company chose to cancel the farm-out, because it said EIG had failed to meet some of the financial conditions stipulated in the contract.
The original heads of agreement was signed in April 2006, with final legal documentation and joint venture arrangements executed in July this year.
At this time, EIG paid Arrow a non-refundable amount of $1 million. In addition, EIG will have to pay $2 million in back-out costs.
Arrow said development activity at the Daandine project and exploration and appraisal activities on the Coastal Queensland and Clarence Moreton basin projects was continuing.
"Retaining 100 percent ownership of these projects will allow Arrow maximum flexibility at this time to progress these projects in order to enable them to provide a key part of the gas supply solution for the proposed Gladstone LNG export facility and to also provide additional gas supply options for our integrated North Queensland gas and electricity business created through the recently announced acquisition of Enertrade's gas and pipeline businesses," the company said.
"In addition the value of the farm-in assets and Arrow's ability to fund required exploration, appraisal and development has changed materially since the original deal was struck in early 2006."
The company added it had sufficient cash flow and reserves to continue funding the previously outlined exploration and appraisal programs on these projects.
In other company news, the company has completed a $120 million placement, via the issue of about 43 million, $2.80 shares, to purchase Enertrade's merchant gas and infrastructure business under a 50/50 joint venture announced last week with AGL Energy.
"The share placement was strongly supported from almost 100 Australian and overseas Institutional investors, the vast majority of whom are existing shareholders in the company," Arrow said.
The non-underwritten placement was jointly managed by Wilson HTM Corporate Finance Ltd, Citi and ABN AMRO Rothschild.
