Woodside’s Peter Coleman cools on big-ticket deals
Woodside boss Peter Coleman says major acquisition activity in the oil and gas sector could be a couple of years away.
Major acquisition activity in the oil and gas sector could be a couple of years away, according to Woodside Petroleum boss Peter Coleman, who has dialled down the rhetoric on the company’s acquisition plans as oil prices continue to fall.
“I don’t think we’re ready at this point in time for step change, I think we’re still at a point in the price curve where accumulating is going to be the best strategy — accumulating and living within your means,” Mr Coleman told The Australian yesterday.
“There are some good assets becoming available and they’re generally at the smaller end, so we’ll be looking at accumulating around existing positions rather than big-bang acquisitions.”
Last year and the year before, Woodside said it was prepared to use its strong balance sheet to make cash acquisitions of up to $US5 billion ($7bn) if decent-quality unwanted assets came on to the market.
It then made an unsuccessful $11.6bn scrip tilt for Papua New Guinea-focused Oil Search over which it could not convince the target to engage.
The big acquisition it did make last year — a $US3.75bn purchase of Apache Corp’s stakes in the Wheatstone LNG project and Balnaves oil project in Western Australia, and the Kitimat LNG project in British Columbia — was this week written down by $US868m because of sliding oil prices.
Mr Coleman said big-ticket deals in the sector would probably need to wait until there was a belief the downturn was over.
“Big transactions in my view are more likely to take place as prices start to improve and people get confidence in that.”
He said companies that were unable to invest in their business to grow would then come under pressure from investors to do something significant.
“Those major assets then may come into the market, but I think that’s a couple of years away,” Mr Coleman said.
Yesterday, Woodside accumulated some deepwater exploration assets in offshore Senegal and Guinea-Bissau, about 150km south of where Melbourne-based junior FAR has had two recent oil discoveries.
Mr Coleman said it was an opportunity to secure high-quality acreage in a petroleum region it was interested in.
“This builds on recent acquisitions in Cameroon, Gabon and Morocco and reflects our disciplined and strategic approach to studying regional petroleum systems,” Mr Coleman said.
The acquisition, for an undisclosed amount, comes in the form of a farm-in that will see Woodside take a 65 per cent interest in a production sharing contract from Britain’s Impact Oil & Gas, which will keep a 20 per cent interest.
On Wednesday, Woodside reported a 99 per cent drop in net profit to $26m because of sliding oil prices and impairments.
Underlying net profit was down 53 per cent to $US1.13bn, beating expectations.
Woodside’s shares fell 7 per cent on the day of the results but rebounded $1.26, or 4.6 per cent, to $28.75 yesterday.