Woodside makes $8.1 bn bid for Oil Search

SYDNEY: Australian energy giant Woodside Petroleum on Tuesday made an estimated Aus$11.6 billion ($8.1 billion) bid for Oil Search in a move to tap into the Papua New Guinea market. Oil Search, whose assets are mostly based in the Pacific island nation, said it was reviewing the bid that will see Woodside offer one share for every four Oil Search shares.

Oil Search was valued at about Aus$11.6 billion, a 14 per cent premium to its closing share price of Aus$6.73 on Monday when Woodside closed at Aus$30.58.

The proposal is subject to satisfactory due diligence and regulatory approvals, as well as support from Oil Search’s major shareholder, the PNG government.

Oil Search’s share price surged 17.38 per cent to close at Aus$7.90, while stocks in Woodside slipped 3.01 per cent to end the day’s trade at Aus$29.66.

The announcement buoyed energy stocks on the benchmark S&P/ASX200 index, with Santos closing 5.25 per cent higher and AGL rising 3.68 per cent.

Oil Search stressed that shareholders were “entitled to an offer which adequately reflects this value potential”, pointing to its share in the massive $19 billion PNG liquefied natural gas project — the largest development ever undertaken in the Pacific country. The company said along with its other low-cost producing assets it was wellplaced to capitalise from a recovery in the oil price, which has roughly halved in a year.

Woodside last month reported a 39 per cent drop in net profit to $679 million in the six months to June 30, saying the decline was due to falling commodity prices.