Shell bids for controlling stake in Woodside

Shell Development Australia Ltd. has made a bid to take control of Woodside Petroleum Ltd. through an assets-for-shares swap worth more than $4 billion (Aus.). Shell has offered to trade its inventory of exploration and production assets in Australian and New Zealand, together with some other overseas E&P assets, for a quantity of new shares in Woodside sufficient to raise Shell's stake in the firm to 60% from the current 34%.


MELBOURNE�Shell Development Australia Ltd. has made a bid to take control of Woodside Petroleum Ltd. through an assets-for-shares swap worth more than $4 billion (Aus.).

Shell has offered to trade its inventory of exploration and production assets in Australian and New Zealand, together with some other overseas E&P assets, for a quantity of new shares in Woodside sufficient to raise Shell's stake in the firm to 60% from the current 34%. If successful, the bid would amalgamate the two companies� one-sixth interests in the $12 billion (Aus.) North West Shelf gas project and their respective interests in the recently commissioned Laminaria oil project in the Timor Sea, where Woodside has a 50% stake and Shell 25%.

The move would also consolidate ownership of the major undeveloped natural gas reserves at Gorgon on the North West Shelf and in Sunrise-Sunset-Troubadour-Evans Shoal fields in the eastern Timor Sea. And it would deliver Woodside�s interest in the Kipper gas field in Bass Strait and its stake in the Papua New Guinea-to-Gladstone natural gas pipeline project, through Woodside's partial ownership of Oil Search Ltd.

The deal must be approved by Woodside�s 10-person board, on which Shell has three seats. Woodside has appointed Credit Suisse First Boston to advise it on Shell's proposal, which Woodside says was unsolicited. Woodside Managing Director John Akehurst noted that the key consideration is the best interests of all shareholders.

Shell claims the proposal is a natural extension of the existing alliance agreement between the two companies, under which Woodside became operator of the group�s combined interests. Analysts see the proposal as part of a much broader global strategy in which the top priority is for the parent Royal Dutch/Shell Group to gain a much greater share of the world�s LNG market.

Coincidentally, Woodside and Santos Ltd. announced last week that their joint bid for 50% of the Kipper fields had been successful (see OGJ Online's Finance/Companies news briefs, May 19). The two companies offered Shell $53.5 million for the stake some time ago but had to wait to learn whether Esso Australia Ltd. and BHP Petroleum Pty. Ltd. would exercise a pre-emptive right over the interest.

Kipper straddles the permit boundary into an adjacent production license held by Esso and BHP. Negotiations over a unitization agreement reportedly are progressing slowly.

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