Quadrant’s liquid assets in Woodside’s sights again

Woodside Petroleum’s North West Venture.

Woodside Petroleum is believed to have cast its eye over Quadrant Energy for a second time as owners Brookfield and Macquarie Group forge ahead with plans for a listing in April next year.

However, while the $25 billion Australian-listed oil and gas company is believed to have circled Quadrant, its interest is said to extend only to its liquefied natural gas assets rather than its domestic gas operation.

Return on capital employed

Whether it acquires part of the asset may depend on the vendors’ willingness to pursue a break-up. Woodside declined to comment on the speculation, but it is not the first time the company is thought to have looked at Quadrant.

The group viewed the assets for an acquisition before Apache Energy sold the portfolio to Brookfield and Macquarie for $US2.1bn to create the Quadrant Energy venture in 2015.

Initially, it was thought Woodside would face issues from the Australian Competition and Consumer Commission on any purchase. But now the North West Shelf production has tapered off and Chevron has ramped up production, the competition risks are not thought to be as great.

The view is that Woodside has bigger aspirations of growth internationally and buying a West Australian asset that is relatively small for the oil and gas major would not be high on its agenda. Still, the company remains under pressure to secure new avenues for growth.

Earnings margin

Woodside bought $US2.8bn of LNG and oil assets owned by Apache in 2015 off the coast of Western Australia. The same year, Woodside made an $11.6bn play for Oil Search, which was rejected and did not resulted in a deal.

Investment bank Goldman Sachs has already worked with Quadrant management to hold non-deal roadshow presentations to potential equity investors as part of its efforts to test the waters for an initial public offering.

Interim dividend

At a $4bn valuation, the transaction would be among the largest for 2018 and an interesting test for the equity capital markets that have been quiet of late.

Mixed reports have surfaced in recent weeks about the level of commitment that owners Brookfield and Macquarie have had towards selling the business. Quadrant also has minority holders such as Wesfarmers, but Macquarie and Brookfield control the lion’s share.

There have been suggestions Brookfield had most recently been eager to retain its share of the asset, while others say Macquarie has become hesitant about selling its stake.

No doubt, should the float proceed, other banks would be brought in as joint lead managers in the coming months.

Separately, New Zealand co-operative Fonterra confirmed it remained a bidder for Murray Goulburn yesterday. As previously reported by The Australian, the co-operative across the Tasman is understood to have put forward a merger proposal for the company when first round bids were due.