Woodside Petroleum Offers $8.1 Billion for Oil Search

[sydbod]

I'm really confused here. Why wouldn't Woodside just buy IOC?

Break it down into short, medium and long  term growth.

OSH: SHORT: already a producer , MEDIUM: PNGLNG can be expanded faster than a whole new LNG plant being built, LONG: equity into a new plant to be built.

IOC: SHORT: no production, Medium: no production facilities that can be expanded in a medium period of time, Long: equity into a new plant to be built.

Although in the longer term IOC may well be the better purchase at this time, but shareholders within WPL want to see a progression of growth in production and income rather than a jump some longer time frame in the future.

It is we (shareholders) that tend to be the problem for efficient management of many companies because we tend to have such a short term view of things in general.

[Tree]

Watch out IOChum.
It's obvi that OSH isn't a must eat.

[jft310]

The problem with Interoil is how much gas do they have under contract with Total ,?. who will do the certification and what number will the average of both new engineering reports show . .? Can't even call for new estimates until we finish drilling . The span of prices between someone who tries to steal Interoil at a low price and what the BOD knows so far is in the ground is Grand Canyon size . This is not the time for a successful bid to buy Interoil . After certification numbers are known and that situation changes . Then at least Antelope can be priced . Today that's not the case .

[jft310]

PORT MORESBY (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, made a A$11.65 billion ($8.1 billion) share-based preliminary takeover bid for Oil Search Ltd. in a deal that would increase its exposure to Papua New Guinea.

Woodside offered one of its shares for every four Oil Search shares, which amounts to about a 14% premium based on Oil Search’s closing price on Monday, Oil Search said in a statement. Oil Search said it’s reviewing the proposal.

Woodside CEO Peter Coleman identified Papua New Guinea as a prospective target area in May last year after he pulled out of a planned investment in Israel. The Financial Review reported at the time that the two companies’ chairmen had held informal talks.

Any deal would come after Oil Search Managing Director Peter Botten identified oil and gas companies as targets by saying in an interview last month with Bloomberg that the plunge in share price following oil’s collapse meant that it was now probably be cheaper to buy a company than a production asset.

Woodside Petroleum made an informal approach to Oil Search’s board regarding a potential deal, the Australian Financial Review reported earlier, citing people it didn’t identify. Port Moresby-based Oil Search is Papua New Guinea’s largest oil and gas producer.

Woodside has a strong balance sheet that may allow the company to make another acquisition and take advantage of low crude prices, according to a February report from

[Palm]

Anybody can be bought at anytime; it's all a matter of negotiations. Having to certify EA is not an insurmountable obstacle for a potential suitor; especially a Total. If we see M&A activity starting to pick up it likely means the players feel the slump is or is close to being over. We may see Total make a move before long.

[jft310]

Historically Super Majors don't own more than 40 percent of a project . BOD requires spreading out risks . Not to say we will not get an offer but the odds of Total being the bidder are slim looking back on history . Others have better odds. Then we have the PNG government what's their latest thinking on takeovers ???
Betting on a takeover is like going to Vegas . Betting on monetization is a valid strategy . In five years we should have Total's money an FID and be closing in on production . Per our partners they want to build the plant as soon as practical. Total recently built an LNG project in 3 years . Where will LNG prices be in 5 years or so???Will they look out for 20-30 year average prices for LNG or look at today's prices??????

[davidhmtk]

There are conditions, including PNG gov't support:

http://www.emtv.com.pg/article.aspx?slug=Woodside-Bids-For-Oil-Search&;

[Palm]

In Total's mind the Certification payment is in effect buying IOC anyways. Temporarily owning more than 40% means little as they can flip a % chunk down the road to someone else when prices have recovered and the project is closer; thus more valuable. In their mind time creates return on the IOC "investment".

[Dr. Wu]

Hession has been waiting for this.  Perfect set up for Botten to reject the deal and approach Interoil for a merger.  Interoil gets a cash flow producing asset in PNG LNG, which along with recert payment, assures financing for Paupua LNG.  Hession becomes CEO of OSH/IOC, Botten is chairman and goes out preserving his ego (somewhat).  The government is the swing factor.  Positive is they preserve a PNG centric "national energy company", which goes a long way toward getting elected in 2017.  On the other hand, the PNG govt might like the cash received from a Woodside purchase of OSH, which would help fund their Papua LNG obligation.  Lots of chess moves ahead..

[Palm]

Merger is something I proposed well over a year ago. Still think it would be good; just hope it's not too late.