The move to buy the plant and all associated infrastructure comes barely a month after signing the January 4 deal giving it ownership of the first liquefied natural gas train at Fisherman's Landing and supersedes the older heads of agreement.
The new agreement is subject to the completion of confirmatory due diligence by Arrow, and LNG Ltd gaining shareholder approval at a meeting to be held within the next 45 days.
"Arrow is excited to be taking full control of the construction and future operation of the world's first CSG-to-LNG facility," Arrow chief executive officer Nick Davies said.
"This further simplification of the Fisherman's Landing LNG development and the elimination of the commercial agreements with LNG Ltd, will improve the ability to construct, finance and ultimately allow for greater flexibility in the operation of the plan."
He added initial site works have already started with project design and planning well advanced.
The price of the acquisition includes $45 million for the reimbursement of project costs incurred to date, an initial $US5 million ($A5.7 million) licensing fee for use of LNG Ltd's OSMR liquefaction technology, and a grant of 12.5 million options exercisable at $3.50 each which expire on May 14, 2010.
Arrow will also pay LNG Ltd a minimum royalty of 0.7% calculated on the oil price differential above $US60 per barrel for the first train, while a higher royalty of 0.9% will be payable if capital expenditure for the project is materially lower than current estimates of $2.1-2.2 billion.
Further payments will be payable to LNG Ltd once certain milestones are reached, including $24 million at final investment decision; an additional $US5 million licensing fee for the use of OSMR at FID; $24 million when the plant produces 1 million tonnes of LNG per annum; and $63.5 million when the plant reaches 3MMtpa LNG production capacity through a second train.
Arrow now plans to focus on full integration of the design and construction plans for the Fisherman's Landing LNG facility into its overall project development plan.
This will include an assessment of the previously announced March 31, 2010, FID date and any project enhancement opportunities that may be available on an integrated basis.
First LNG production remains on track for late 2012.
The company also is in talks with Golar Energy to transfer the existing HoA for the sale and purchase of LNG from Train 1.
Arrow added the overall project cost estimates remained within its financial capability, saying it was still in the scope of the funding options outlined on February 2.
These include a combination of corporate and project debt finance as well as export credit agency-supported debt finance.
LNG Ltd managing director Maurice Brand said that on completion of the deal, the company would have $85 million in cash, 12.5 million Arrow options and no further funding commitments for Fisherman's Landing, allowing it to focus on marketing its OSMR technology and other mid-scale LNG opportunities.
Fisherman's Landing is planned as a two-train LNG plant capable of producing 3MMtpa, which uses coal seam gas from Arrow's upstream tenements as feedstock.
