Premium price for Woodside in deal

A BULKED up Woodside Petroleum could be worth $28 a share – a 43 per cent premium to its current price – if the $40bn BHP Petroleum deal proceeds, Bank of America analysts said.

It expects shareholders to benefit from a stronger balance sheet with lower gearing of 12 per cent from 23 per cent pre-merger, the ability to sell non-core assets and also the better phasing of growth projects through this decade.

Concerns have been raised that BHP investors will offload their shares in Woodside, but the broker said the flow-back of Woodside shares could be offset by index buying as Woodside’s weighting on the ASX increases from 0.9 per cent to 1.8 per cent as its market cap doubles from $20bn to $40bn. “In our view, this increased scale and relevance will also make Woodside more attractive to global oil & gas investors,” the broker said.

Woodside shares fell 7c to $19.62 on Wednesday.

The ASX 200 index closed down 18.3 points at 7512 points after an early fall to 7476.3.

The ASX 200 closed 18.9 points lower at 7807.5.