Papua New Guinea: Australia's leading natural gas company joins the party
[note that Oil Search is Lundin Oils partner in the Pandora and Pasca licenses in the Gulf of Papua, see this prospects map: oilsearch.com.au ]
The National, Friday April 23
Oil Search gets K178m Woodside cash injection
PORT MORESBY: Oil Search Ltd yesterday received an A$118 million (K178 million) cash injection following placement of 56.4 million shares at a premium of A$2.10 a share with Australia's leading natural gas company, Woodside Petroleum Ltd.
Funds raised by the placement, which is subject to the approval of Oil Search shareholders and the Bank of Papua New Guinea, "will be used to reduce the company's debt and to fund our expanding role in the development of the PNG to Queensland gas project", according to the managing director of Oil Search, Peter Botten.
The Woodside placement would give Australia's only exporter of liquefied natural gas (LNG) a 12 per cent stake in Oil Search. Once the placement is approved it will take a seat on the Oil Search Board.
The Woodside involvement in Oil Search represents a major potential boost for oil and gas exploration in PNG, as well as for possible downstream gas processing, because Woodside's key shareholder is the multinational Shell Group.
Mr Botten said: "We are pleased to finalise the agreement with Woodside, a company with which we have already strong working relationship in licences in PNG. The introduction of Woodside as a shareholder, with their experience in major gas developments, clearly brings a wealth of experience to our register and underscores our confidence in the development of gas and oil resources in PNG.
"Over the past four months, the company has successfully put in place long term financing arrangements for acquisitions and new developments, monetised a proportion of its gas assets by the sale of interest in the Hides gas field, and made significant progress in developing the PNG Gas Project."
Wilson HTM analyst Andrew Williams said the placement was "extremely positive" for Oil Search, which the market thought was going to be cash constrained in 1999.
"It certainly takes away one of the market concerns that there would be an equity issue coming anyway," he saids.
"Generally rights issues are done at a bit of a discount to the market, this was done at a pretty good premium, so I guess it's a great deal for Oil Search."
He said it was another positive move for the gas pipeline project, following on from Oil Search's agreement last week with fellow Hides field participant Exxon Corp to guarantee long-term gas reserves for the pipeline project.
"Now you have Woodside coming in who has a defined and articulated Eastern Coast strategy and a strategy for PNG," Mr Williams said.
"And they wouldn't get in if they didn't believe the pipeline project was a goer."
He said it was less clear whether the placement was a good move for Woodside. "It doesn't make a lot of sense to me," Mr Williams said.
"The only benefit Woodside will get is capital gain if they are going to be a seller down the track and if the share price runs it makes it more expensive for them to take it over.
"So if they are going to make a takeover bid you would expect it to come out sooner rather than later."
Queensland Minister for State Development, Jim Elder, welcomed the Woodside investment in Oil Search, saying it was a boost for the pipeline project.
Potential customer Comalco Ltd, which is considering PNG gas for a proposed A$1.4 billion gas-fired alumina refinery in Gladstone, also said Woodside's involvement was a welcomed move.
"I think Woodside is probably a positive thing for all concerned," a Comalco spokesman said.
He also said Santos' announcement on Wednesday that it would commit its share of the Hides reserves to the project was another positive step.
He said in order for Comalco to meet a "window of opportunity" for its pipeline it was necessary to have first gas delivered by the first half of 2002, as is the current timetable.
"We need to have the first stage of any refinery up and running by the first half of 2002," he said, adding that the refinery would take around two-and-a-half years to build.
Oil Search shares closed three cents up at A$1.92, while Woodside surged 15 cents to A$9.85 and Comalco jumped 19.1 cents to A$6.191.
wr.com.au
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Woodside joins party
PostCourier, Friday April 23
AUSTRALIAN petroleum major Woodside Petroleum Ltd owns an interest in Papua New Guinea's oil industry following a deal signed yesterday with PNG's Oil Search Ltd.
Oil Search Ltd announced it had reached an agreement with Woodside for the placement of 56.4 million ordinary shares or 12 per cent in the company at an issue price of $A2.10 a share, which would raise $A118.44 million.
The deal has to be approved by Oil Search shareholders, expected at the upcoming annual general meeting in June, and the Bank of PNG. Once approved, Woodside will take a seat on the Oil Search board.
Oil Search managing director Peter Botten said funds raised from the issue will be used to reduce the company's debt and fund their expanding role in the development of the PNG Gas project.
Mr Botten said the project has gained substantial momentum since the commitment of appropriate reserves were made to the project earlier this month.
He told the Post-Courier from Perth, Western Australia, that the deal is a ''ringing endorsement of what we are doing . . . and a ringing endorsement of the PNG Gas project''.
Mr Botten said bringing petroleum majors Santos and Woodside into a partnership with Oil Search is part of their strategy to bring in key gas players.
He said Santos would assist by being a participant and would also help with their commercial security of gas supplies for the project.
Mr Botten said Woodside is a ''very experienced company in gas pipelines and 20 years ago, they were like Oil Search''.
''We are pleased to finalise the agreement with Woodside, a company which we have already strong working relations with in licences in Papua New Guinea.
''The introduction of Woodside as a shareholder, with their experience in major gas developments, clearly brings a wealth of expertise to our register and underscores our confidence in the development of gas and oil resources in Papua New Guinea.
''Over the past four months, the company has successfully put in place long term financing arrangements for acquisitions and new developments, monetised a proportion of its gas assets by the sale of interest in the Hides gas field and made significant progress in developing the PNG Gas project.
''Funds used from this placement will add further strength to our balance sheet and help fund the company's share of development costs in the PNG to Queensland project as investment increases towards financial close,'' said Mr Botten.
The announcement of the deal was made after the market closed. Oil Search shares closed four cents up at $A1.93 a share.
postcourier.com.pg |
