Bloomberg News

Woodside’s Drop May Renew BHP Interest, Credit Suisse Says

June 20, 2011

(Closes shares.)

June 20 (Bloomberg) -- Woodside Petroleum Ltd. may become a more attractive target for BHP Billiton Ltd. if its shares remain “depressed” in Sydney after announcing a cost increase and delay at its Pluto gas venture, Credit Suisse Group AG said.

Woodside, whose shares have dropped 13 percent since Peter Coleman took over as chief executive officer on May 30, could give BHP a platform to become “a major player” in supplying liquefied natural gas supply to Asia, Credit Suisse analysts including Sandra McCullagh in Sydney wrote in a report.

Australia’s second-largest oil producer has been the subject of takeover speculation since its biggest shareholder, Royal Dutch Shell Plc, sold part of its stake in the company in 2010. Woodside fell 3.8 percent to A$40.80 June 17, the most in more than seven months, after saying its Pluto LNG project would start six months later than expected and cost 6.4 percent more.

“Woodside may have been too expensive for BHP once a takeover premium is included, but if Woodside’s share price stays in the low A$40s, BHP’s interest in Woodside may be renewed,” the Credit Suisse analysts said in the report today.

Laura Hammer, a Woodside spokeswoman in Perth, declined in an e-mail to comment. Kelly Quirke, a spokeswoman for the world’s largest mining company in Melbourne, declined to comment.

Woodside dropped 2.2 percent to A$39.91 at the 4:10 p.m. close in Sydney, compared with a 0.7 percent decline for the benchmark S&P/ASX 200 Index. BHP fell 1.4 percent to A$41.36.

Pluto is set to cost A$14.9 billion ($15.8 billion), compared with a prior estimate of A$14 billion. First cargoes of LNG are due in March 2012, according to Woodside, which had earlier slated shipments for September. The company, Australia’s largest oil and gas producer after BHP, owns 90 percent of Pluto. Tokyo Gas Co. and Kansai Electric Power Co. each has 5 percent.

Expanding Pluto

Woodside may delay an investment decision to expand Pluto until 2012 and defer an approval of its proposed Browse venture from a current mid-2012 target, John Hirjee, a Melbourne-based analyst at Deutsche Bank, wrote in a report dated June 17.

The operator of the North West Shelf LNG project is planning the Browse and Sunrise LNG developments after Pluto to tap rising Asian demand.

Coleman, appointed on May 12 to replace Don Voelte, was previously vice president of Exxon Mobil Development Co., where he led work on more than $40 billion of projects worldwide.

--Editors: Ryan Woo, Jane Lee.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.


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