UPDATE 2-Arrow Energy buys coal seam gas stake for $286 mln

* Arrow to buy Beach Petroleum's stake in Tipton West field

* To pay A$260 mln in cash, A$70 mln in shares up front

* Acquisition to boost Arrow's reserves (adds details, background)

By Fayen Wong

PERTH, April 3 (Reuters) - Australia's Arrow Energy Ltd (AOE.AX) will pay up to A$400 million ($286 million) for a 40 percent stake in the Tipton West field to boost its coal seam gas reserves and help it supply a planned gas export project.

Arrow's move comes just weeks after it lost a A$1 billion takeover battle with Britain's BG Group Plc (BG.L) for junior coal seam gas producer Pure Energy Ltd (PES.AX).

However, Arrow booked a profit of about A$200 million from selling its 20 percent stake in Pure, and said the proceeds would help finance the deal with Beach Petroleum Ltd (BPT.AX).

Analysts noted that Arrow already owned 60 percent of the field and is operator of the Tipton West field in the northeastern state of Queensland.

"It's a good deal for Arrow and it seems like they have bought the stake at a very good price," said Chris Brown, an energy analyst at ABN AMRO.

Brown said the deal implied a price of about 73 cents for each gigajoule of proved and probable (2P) reserves, which was much lower than multiples paid for coal seam gas in recent deals.

Arrow said on Friday it would pay Beach A$260 million cash and A$70 million in Arrow shares.

Beach will get an additional A$40 million when reserve levels are increased at Tipton West, and up to a further A$30 million if certain targets related to liquefied natural gas supply are met.

Arrow, which is Royal Dutch Shell's (RDSa.L) local partner in coal seam gas, said the acquisition would increase its total 2P gas reserves by 40 percent to 1,644 petajoules.

On completion, 12 percent of Tipton West will be made available to Shell under a preemptive rights agreement, said Arrow, which has an agreement to supply gas to a proposed 1.5 million tonnes a year LNG project at the port of Gladstone in Queensland.

Shares in Arrow rose 2.4 percent to A$2.94 by 0341 GMT, while Beach, which said it would book a profit of A$276 million this year from the sale, fell 4.4 percent to A$0.87. Australia's energy sub-index .AXEJ was up 1 percent.

"There may have been some disappoint that Beach didn't get more," said Andrew Pedler, an energy analyst at Wilson HTM.