Photo by: Bloombeg
PERTH (miningweekly.com) – Australian oil and gas major Woodside on Tuesday confirmed that it had launched a confidential and nonbinding merger offer for fellow-listed Oil Search.
Woodside said it would offer 0.25 of its own shares for every one Oil Search share held, allowing Oil Search shareholders to maintain a stake in the combined entity.
The merger proposal was subject to Papua New Guinea (PNG) regulatory approval, the completion of a satisfactory due diligence and other customary conditions. The proposal would also be conditional upon the parties entering into a binding implementation agreement.
Woodside stated that the merger proposal was consistent with the company’s strategy of delivering superior shareholder returns by maximising the value of its core assets, leveraging its capabilities and growing its portfolio.
Oil Search responded that it would review the proposal and update its shareholders and the market in due course.
The company pointed out that it currently had a material equity position in the PNG liquefied natural gas (LNG) project, and attractive, low-cost LNG development opportunities including the PNG LNG train 3 expansion and the Papua LNG project.
This, combined with the company’s low operating cost producing assets, reserve upsides, significant discovered resources and extensive and high-quality exploration acreage position, provided substantive scope for capital growth and positioned Oil Search to capitalise from a recovery in the oil price.
“Clearly Oil Search shareholders are entitled to an offer which adequately reflects this value potential,” the company said in a statement.
Oil Search was trading at a high of A$7.87 a share on Tuesday, while Woodside shares were trading at A$29.91 each.