Global is in the advanced stages of business development for the acquisition of CSM – also known as coal bed methane (CBM) – assets in Indonesia, China, Vietnam and India.

Under the agreement, Arrow and Global’s international business development teams and opportunities will be merged into Global, which will be renamed Arrow Global CBM.

Arrow International will fund up to $2 million of business development costs for Arrow Global CBM.

In return, Arrow International will receive an initial 50% shareholding interest in Global. It will also nominate two directors to the four-person board and have a two-year option to acquire the remaining 50% shareholding from the existing Global shareholders.

Arrow said it intends to eventually seek an overseas listing of its foreign assets, which already include three CSM projects in India.

Prior to this listing taking place, Arrow International will have the option to acquire a further 25% in Global from its existing shareholders for $US4 million ($A5.1 million) worth of Arrow International shares.

Arrow will also have a second option, to acquire the final 25% in Global, by paying 25% of an independent expert’s valuation of Arrow Global CBM.

That valuation will exclude the Indian CSM blocks in which Arrow already has title.

Both of these latter two payments will be made by the issue of shares in Arrow International at the initial public offer share pricing.

Arrow said it considers this the next step in a low cost compilation of a “significant” portfolio of international CSM assets.

“Arrow is confident that it can replicate its success as one of the pioneers of the Australian CBM industry in a number of countries where the CBM industry is still in its infancy and where demand for cleaner energy sources is experiencing strong growth,” it said.