2009 Media Releases

August 11, 2009

Deutsche Bank initiates coverage of Arrow Energy Limited

Deutsche Bank has initiated coverage of coal seam gas company Arrow Energy Limited (ASX: AOE) with a Hold recommendation.

Research analyst John Hirjee initiated coverage with an AUD3.60 twelve month price target.

Mr Hirjee said, “Arrow Energy has developed into an AUD3billion integrated coal seam gas (CSG) company with global reach. It is seeking to reap higher returns by venturing downstream into electricity generation and liquefied natural gas (LNG) projects. The increase of 2P reserves to 2,405PJ will further downstream expansion plans. Arrow also has significant CSG opportunities offshore, with interests in India, China, Vietnam and Indonesia.”

According to Deutsche Bank research, Arrow has recently finalised a major alliance with Shell Exploration Company B.V (Shell) to jointly develop the upstream Australian and international CSG projects.

“This joint venture significantly increases the potential for international expansion, however these growth prospects are at higher risk than sector peers. Risks include the failure of Fisherman’s Landing LNG project– a proposed LNG plant at Gladstone, CSG technical risks, exploration failures and potential corporate interest. We believe the risk profile of growth opportunities is fairly reflected in our hold rating.”

Arrow Energy Limited is a Brisbane-based coal seam gas exploration company with interests in Australia, China, India, Vietnam and Indonesia. The company is expanding through vertical integration into electricity generation, ownership of gas distribution infrastructure and the potential to enter into LNG markets. Arrow was established in 1997 and listed on the Australian Stock Exchange on 16 August 2000.

For further information, please contact:

Michelle Chaperon (02) 8258 1311



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