Doubt on Woodside’s Conoco deal

Woodside may not be the only party in play for ConocoPhillips’ Senegal assets.

Woodside is eyeing a 35 per cent stake in the SNE onshore development.

Woodside Petroleum may have company in the chase to buy ConocoPhillips’ Senegal assets as the latter’s joint venture partner, FAR Ltd, hints it may be willing to take on the Perth-based behemoth.

Woodside last month agreed to pay $US430 million ($563m) to secure control of Conoco’s Senegal unit, but the deal was left open to counter offers from the target’s joint venture parties given their pre-emptive rights.

The talk of a lowball price was rumoured to have spurred interest from both ASX-listed FAR and fellow JV partner Cairn Energy and while the latter has since distanced itself from the prospect, FAR today provided a signal it is keen to put forward a rival bid.

In a statement to the market this afternoon, FAR said the terms of its JV deal had not been met, meaning it should be provided with more time to put forward a counter offer.

“ConocoPhillips has confirmed to FAR Ltd that it has a right of pre-emption over the proposed sale of ConocoPhillips interests in Senegal to Woodside Petroleum,” the company said.

“FAR advises that, in its opinion, and as supported by legal advice, ConocoPhillips has failed to comply with the terms of the Joint Operating Agreement in relation to the proposed sale of its interests in the Senegal project.

“As a consequence FAR believes that the pre-emption period has not yet commenced.”

The group added both parties had been urged by the Senegal Government to reach a swift conclusion on the dispute.

“FAR looks forward to updating the market when the pre-emption timetable has been finalised,” the group said.

The commentary indicates FAR is in the midst of drumming up funding support for an offer, which won’t come easy given its $350m market cap is comfortably below the purchase price put forward by Woodside.

It follows FAR’s 14 per cent upgrade to the contingent resources at the SNE offshore field this morning, which is the project at the heart of the deal.

Woodside is eyeing a 35 per cent stake in the development, while FAR maintains a 15 per cent position.

The twist in the tale comes after Cairn Energy confirmed last week it would be happy to welcome Woodside on board.

“We’ve confirmed to Conoco that we are supportive of Woodside coming into the joint venture,” Cairn chief executive Simon Thompson said.

“From our perspective we think that they should be a value adding partner for us.”

At 2.40pm (AEST), FAR Ltd shares dipped 2.5 per cent to 7.8c, while Woodside eased 0.4 per cent to $29.21.