The Brisbane-based company today said under the deal, Arrow Global and Orion will perform a joint technical and commercial study of two concession blocks in China’s “premiere” CSM basins, Ordos and Qinshu.

Orion, which operates solely in China, already has 70% upstream working interest in the basins.

Arrow said it will earn 5% in both of the blocks by conducting the study. It will also have an option to farm-in for a further 25% based on funding a work program to be agreed, up to a maximum of $10 million.

Orion will act as Arrow’s partner and representative in the country, and will use their in-country relationships to help consolidate and grow the combined companies businesses in China.

The two companies will also look for a broad range of additional opportunities in the CSM industry in China with the aim of growing a “significant, multi-asset business together”, Arrow said.

The study phase of the farm-in is expected to be completed in two months.

Arrow said following successful completion of the farm-in, these assets will become part of Arrow Global’s portfolio.

Arrow Global is also in the advanced stages of business development in Indonesia and Vietnam and is targeting adding these assets to the portfolio.

The company said the Arrow Global portfolio, together with the existing Arrow India assets, will form part of a proposed partial initial public offer of Arrow International later this year.

Arrow recently acquired 50% of the issued capital of Arrow Global, and has a two-year option to acquire the remaining 50% shareholding.