Thu, Dec 18, 2014 - Page 15 News List

Australia’s Woodside invests in US firm


Woodside Petroleum Ltd shares jumped yesterday following the Australian energy producer’s decision to pay US$2.75 billion to acquire stakes in liquefied natural gas (LNG) projects from US firm Apache Corp.

The deal came as Woodside delayed a decision on Tuesday to invest in the Browse gas-export project off Western Australia to take advantage of lower costs for the multibillion-dollar venture.

The oil and gas giant’s shares closed 3.02 percent higher to A$35.50 yesterday in Sydney trading. They fell 2.6 percent to A$34.46 on Tuesday along with declines in other energy stocks.

The acquisition transaction includes a 13 percent interest in Wheatstone LNG and a 65 percent interest in the Julimar-Brunello upstream gas development, both in Western Australia.

Woodside also acquires a 65 percent interest in the Balnaves oil project off the coast of Western Australia, as well as a 50 percent interest in the Kitimat LNG venture in Canada.

The energy market has been challenged by tumbling oil prices, which plunged further following a decision by OPEC last month against cutting production.

However, Woodside chief executive Peter Coleman said it presented an opportunity for investment in high-quality projects, adding that the transaction was a “natural fit” with his company’s portfolio.

“We are now in a position to take advantage of challenging market conditions and use cash reserves and existing debt facilities to acquire very high quality assets,” he said in a statement.

The Browse decision was delayed to also take advantage of the changing market conditions, which could lead to lower costs within the business in nine to 18 months, Coleman added in a teleconference on Tuesday.

“I expect [that] over the next 12 months or more, we’ll start to see cost wash through the business. So at the end of the day, it’s all about margin,” he said.

UBS energy analyst Nik Burns said the acquisition was “fairly safe,” and filled a production hole which was looming.

“We expect to see more assets coming into the market at good prices over the next six to 12 months,” he added.

In other trading on Tuesday, Talisman Energy Inc shares soared 48 percent following news that Repsol SA, a Spanish oil and gas producer, agreed to buy the Canadian company for US$8.3 billion.

Talisman shareholders will receive US$8 in cash for each share they own, according to statements from both companies. That represents a 60 percent premium over Talisman’s 30-day weighted average price, the Calgary-based company said.

Talisman’s stock gained US$2.46 to $7.58 on Tuesday in Toronto trading.

Additional reporting by AP

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