Oil Search rejects Woodside’s takeover bid

Oil Search Ltd. (ASX Code: OSH) has rejected Woodside’s (ASX Code: WPL) non-binding conditional indicative proposal to acquire all the shares in Oil Search for a consideration of one Woodside share for every four Oil Search shares held.

Following a detailed evaluation of the proposal, Oil Search’s board of directors has concluded that the proposal is highly opportunistic and grossly undervalues Oil Search. Since receiving Woodside’s proposal, Oil Search has undertaken substantial shareholder engagement and feedback has been that this proposal has little merit.

Among its projects, Oil Search has a material equity position in the Papua New Guinea (PNG) LNG Project and in projects that include the expansion of the PNG LNG Project through debottlenecking, the construction of a third LNG train, and the development of the proposed Papua LNG Project.

In a press release, Oil Search says that the company is “in a very robust financial position, with strong operating cash flows from its producing assets, even at current low oil prices, and current liquidity of US$1.6 billion, comprising US$850 million in cash and US$750 million in undrawn corporate credit facilities. Together with our operators, ExxonMobil and Total, and our other joint venture partners, Oil Search has access to competitively priced project finance for its LNG developments and substantial corporate debt capacity. The company is well placed to fund the development of its growth projects.”

Rick Lee, Oil Search chairman, commented, “The board of Oil Search believes our company is in a very strong position, both operationally and financially. We have a low-cost, high-quality production base that is generating strong cash flows and excellent growth opportunities, with the proposed PNG LNG Train 3 and Papua LNG among the most competitive new developments in the world. Oil Search provides its shareholders with a pure exposure to PNG and is fully committed to PNG. Our focus is on continuing to build and create shareholder value through the company’s strong future growth prospects.”

 

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