With a planned push into Senegal, off West Africa, under a cloud, Woodside Petroleum has opted for a safer option with its latest expansion by acquiring acreage off Western Australia.
The company said on Monday it would acquire BHP’s half interest in acreage in the Scarborough area for as much as $US400 million ($527 million), with $US250 million paid upfront and the balance due once a decision is taken to bring the acreage into production.
Along with BHP’s interest in Scarborough, the deal includes its stake in the smaller Thebe and Jupiter fields nearby, with reserves estimated at a gross 8.7 trillion cubic feet of gas with Woodside’s net share estimated at 2.6 trillion cubic feet of gas.
Woodside said no further appraisal wells needed to be drilled to clarify the extent of the resource, although no decision had been made about bringing the fields into production, and the likely cost.
Since it abandoned a $US2.5 billion ($3.3 billion) deal to buy into a gas project in Israel two years ago and the rejection of its $11.6 billion bid for Oil Search less than a year ago, Woodside has said it is looking to acquire unwanted assets put on the market by competitors amid the steep downturn in the oil and gas price.
“We will pursue acquisitions that match and complement our capabilities, technology and regional focus areas,” Woodside chief executive Peter Coleman told analysts last month, pointing specifically to the likelihood that acreage off Western Australia could come up for sale.
In July, Woodside said it would acquire an interest in acreage off Senegal, paying up to $US430 million, which could also see it emerge as the operator if the resource there is developed. Last month, however, a locally listed partner in the Senegal acreage, FAR, said it had pre-emptive rights over the interest acquired by Woodside, but it has yet to signal whether it will challenge the deal.
Woodside has said it has $1 billion of balance sheet capacity to make acquisitions, and completion of the Senegal and Scarborough deals will soak up the bulk of that. If the Senegal deal does proceed, it will bring to $US830 million the amount committed by Woodside on acquisitions, with $US600 million due up front.
The company has also highlighted a greater interest in acquiring oil assets due to the pervasive glut of gas.
The asset purchases come amid renewed speculation that global oil major Shell is looking to offload its remaining 13.6 per cent stake in the company.
The story Woodside buys Australian amid cloud over plan to buy abroad first appeared on The Sydney Morning Herald.