Woodside Has Splashed Out $3.4 Billion In A Counter-Cyclical Move To Buy More Natural Gas And Oil Projects

A LNG tanker at Karratha, Western Australia. Image: Woodside.

Woodside Petroleum is buying out Texas-based Apache Corporation’s interests in the Australian Wheatstone natural gas project, plus the Balnaves oil and the Kitimat gas projects in Canada for a total of US$2.75 billion (AU$3.348 billion).

This gives Woodside a 13% interest in the Chevron Wheatstone LNG Project, a 65% interest in the Julimar-Brunello upstream gas development, 65% in the Balnaves oil project and 50% in the Kitimat LNG project.

Woodside says its disciplined approach to capital management and acquisition evaluation has resulted in the counter-cyclical, value-adding growth opportunity.

With falling global prices for oil, most investors are getting out of energy. However, CEO Peter Coleman says the acquisition is a natural fit with Woodside’s current portfolio.

“We have taken a disciplined and patient approach to identifying the right growth investment,” he says. “We are now in a position to take advantage of challenging market conditions and use cash reserves and existing debt facilities to acquire very high quality assets.”

The acquisition is fully funded by existing cash and debt. The company is retaining its previous guidance on dividends.

The acquisition has an effective date of July 1, 2014, and is subject to regulatory approvals.

Woodside shares are trading 2.7% down to $34.43.

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