Woodside Petroleum offers A$11.65 billion for Oil Search

ANDREW HOBBS and JAMES PATON

PORT MORESBY  (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, made a A$11.65 billion ($8.1 billion) share-based preliminary takeover bid for Oil Search Ltd. in a deal that would increase its exposure to Papua New Guinea.

Woodside offered one of its shares for every four Oil Search shares, which amounts to about a 14% premium based on Oil Search’s closing price on Monday, Oil Search said in a statement. Oil Search said it’s reviewing the proposal.

Woodside CEO Peter Coleman identified Papua New Guinea as a prospective target area in May last year after he pulled out of a planned investment in Israel. The Financial Review reported at the time that the two companies’ chairmen had held informal talks.

Any deal would come after Oil Search Managing Director Peter Botten identified oil and gas companies as targets by saying in an interview last month with Bloomberg that the plunge in share price following oil’s collapse meant that it was now probably be cheaper to buy a company than a production asset.

Woodside Petroleum made an informal approach to Oil Search’s board regarding a potential deal, the Australian Financial Review reported earlier, citing people it didn’t identify. Port Moresby-based Oil Search is Papua New Guinea’s largest oil and gas producer.

Woodside has a strong balance sheet that may allow the company to make another acquisition and take advantage of low crude prices, according to a February report from Goldman Sachs Group Inc.