Australian CBM, previously owned by Arrow director Ron Prefontaine, sold 55% of its assets into Arrow in June last year. Arrow completed the balance of the deal, the option on which expired at the end of the financial year, by paying $180,000 cash, 3,433,000 ordinary Arrow shares and 4,000,000 options( 28 June 2004 at 20 cents).
Arrow said the acquisition consolidates its position over the Walloon CBM fairway in Queensland's Surat Basin. "Arrow holds in excess of 3.5 million acres (14,000 sq.km) of prospective areas in the fairway, an area larger than the Powder River basin in Wyoming, USA, which currently produces in excess of 500 million cubic feet per day of coal bed methane," the company said.
"Arrow has identified potential for a gas resource of approximately 10 trillion cubic feet within its project areas."
The ACBM tenements include ATP 676P, which is the subject of a development agreement between CS Energy Limited and Arrow that calls for a staged feasibility study into a commercial CBM production and gas processing facility in the Chinchilla area (about 300km north west of Brisbane in the Darling Downs).
Under the agreement, Arrow will supply 4 petajoules (PJ) of gas per year to CS Energy over 15 years. Arrow said it will also consider the sale of a further 8PJ per year to third Parties depending on having sufficient gas and the processing plant feasibility.
Arrow also indicated it is committed to the construction of a five well pilot production program in either the Dundee area, 10km south of Chinchilla, or the Kogan North area in ATP676P, within 4km of the Roma to Brisbane pipeline. Construction of the pilot program is scheduled for the later part of this year, most likely the fourth quarter.
