Woodside, Phillips, Shell detail Timor sea gas deal

Woodside, Phillips, Shell detail Timor sea gas deal

MELBOURNE (Dow Jones): Takeover target Woodside Petroleum Ltd. Friday finalized the details of its deal with Phillips Petroleum Co. to jointly develop their Timor Sea gas fields.

Phillips will pay Woodside effectively upwards of US$176 million to acquire a 16.39 percent stake from the Australian company in Greater Sunrise fields, raising its stake to 30 percent, while granting Woodside a conditional option to buy up to 5 percent of Phillips' nearby Bayu-Undan fields.

The price isn't expected to changed the dynamics of Woodside's fight to beat off a A$9.87 billion takeover bid from Royal Dutch Shell Group, since it is in line with valuations from both Woodside and Shell.

While Woodside continues to argue that Shell's bid is too cheap, the focus of the fight remains with the Australian government, which is taking its time over whether to approve the bid amid concerns that it is against the national interest.

By jointly developing Bayu-Undan and Greater Sunrise, the participants hope to develop the field fast and more cheaply. While the Sunrise and Bayu-Undan projects will compete for customers in Australia's domestic gas market, Phillips will take the lead on marketing eventual liquefied natural gas from the two projects.

Under the deal, that was first announced in November, Phillips has agreed to fund US$176 million worth of Woodside's costs for any development at Sunrise, escalated at 10 percent a year.

Shell, a fellow participant in Sunrise, has given the deal its blessing, but it remains subject to 10% field participant Osaka Gas Co. (J.OSG) not exercising its preemptive right.