Woodside bid for Oil Search rejected

Oil Search, Papua New Guinea’s largest exploration and production company, has rejected Woodside Petroleum’s AUD11.6-billion ($8.1-billion) offer for acquisition.

The company’s board and shareholders convened Sunday night to discuss the offer proposed by Woodside. In their press release, Oil Search stated Woodside’s offer was “highly opportunistic” and that it “grossly undervalues the company.”

Company chairman, Mr. Rick Lee, went on to say he believes Oil Search is “[…] in a very strong position, both operationally and financially. We have a low cost, high quality, production base which is generating strong cash flows and excellent growth opportunities.”

Statements issued by Woodside on the proposal rejection were reported as “surprised and disappointed” in Oil Search’s decision.

Woodside’s offer of AUD7.64 per share, a 17 percent premium, was seen as low when compared to the AUD8.10 the Papua New Guinean government offered to buy into the company just last year.

Mr. Lee wrapped up by leaving the door open to negotiations. “If any proposals are tabled in the future that reflect compelling value for Oil Search shareholders, we will engage on them.” It is reported that any proposal offered to Oil Search is expected to fall within a 25-30 percent premium range before it will gain any consideration.

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