Woodside CEO Will Study U.S. Oil Assets, Including BP Fields

Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil and gas producer, will look at the almost $8 billion of Gulf of Mexico assets that BP Plc (BP/) has put up for sale as part of its study of possible U.S. petroleum acquisitions.

“We’ll look at those assets,” Peter Coleman, chief executive officer of the Perth-based company, said today in an interview in Sydney. “We know what those assets are. We won’t comment on particular assets. What we do is characterize assets. We want long-life assets, world-class assets.”
Enlarge image Woodside Petroleum CEO Peter Coleman

China Petrochemical Corp., Asia’s biggest refiner by capacity, and BHP Billiton Ltd. (BHP) may also be potential acquirers of the assets that BP said in May it would sell, according to analysts. Woodside, which owns stakes in fields in the Gulf, is evaluating potential deals in the Eastern Mediterranean, Southeast Asia and the Americas, the company said yesterday.

“We’ve been in the Gulf of Mexico a long time,” said Coleman. “Over the next few years, you’re going to see some of the heat go out of the market in the U.S. in respect of pricing and there may be opportunity.”

Woodside began exploring in the Gulf of Mexico in 1999 and has stakes in the Neptune and Power Play oil fields, its website shows. Company executives have also visited countries in the Eastern Mediterranean region, including Israel, Coleman said.

‘Buy Wisely’

BP, Europe’s second-biggest oil company, said in May it plans to divest Gulf fields, including Horn Mountain and its minority stake in Ram Powell. The company is seeking as much as $7.9 billion before tax payments for the assets, two people with knowledge of the matter said this month.

Coleman, an Australian citizen who joined Woodside in May 2011 after 27 years with Exxon Mobil Corp. (XOM), believes that Woodside can’t generate “top quartile” returns based on its existing projects, James Bullen, a Sydney-based analyst at Bank of America Corp., wrote in a report yesterday.

“But in a very competitive M&A environment, which is being dominated by big-spending national oil companies, an accretive deal for existing resources will be highly challenging,” forcing Woodside to look for riskier exploration assets, according to the analyst’s report.

A proposed expansion of Woodside’s A$15 billion ($15.8 billion) Pluto liquefied natural gas venture in Western Australia is on hold after the company said yesterday that a drilling campaign failed to find enough gas to support a second phase. Woodside will continue talks into 2013 with other owners of gas resources to get supplies, according to the company.

The energy company yesterday declared a dividend of 65 cents a share, up 18 percent from a year earlier, and said it plans to maintain a minimum dividend payout ratio of 50 percent of net profit, excluding one-time items. The company has cash and undrawn debt facilities of $2.2 billion.

Woodside rose 1.1 percent to A$35.27 at the close of trading in Sydney, while the benchmark index gained 0.2 percent.

“We’ll continue to reward shareholders with dividends and buybacks,” Coleman said. “We’ve got lots of options. That doesn’t mean we’re sitting on our hands. We’re working really hard, but equally you want to make sure that you buy wisely.”