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The statement reads: ‘negotiations between the parties failed to reach a commercially acceptable outcome’.
This is not unexpected considering WPL has had to renegotiate the original agreement that saw it paying US$2.3 billion for a 5% less stake in a project. The other major issue is the project continues to shift move away from WPL’s area of expertise in LNG to pipeline gas through Turkey.
The original synergies have been breaking down, the geopolitical tensions in the region coupled with WPL’s largest shareholder Shell’s Gulf assets was making the deal harder and harder to see coming to fruition, and now project specifics are seen at an end.
The question now is what happens with the US$1.3 billion raised over the course of the deal. The market’s reaction suggests some are expecting to see it returned to shareholders, however I believe that with Browse and Sunrise long term pipeline projects CEO Peter Coleman may be looking for growth asset that are in vogue now.
This puts Oil Search in play as Leviathan shows WPL is looking for an offshore project to diversify its portfolio and earnings stream. With the PNG LNG coming online ahead of time and on budget, production is expected to quadruple on current guidance. Upside surprise looks highly likely and the gas field project it has acquired over the past four year also make it an attractive proposition.
Is it in Woodside’s sights?