By Robb M. Stewart
MELBOURNE--Australia's Woodside Petroleum Ltd. (WPL.AU) Monday
said it has struck a deal to buy a 30% stake in the Leviathan field
offshore Israel, which is estimated to contain about 17 trillion
cubic feet of recoverable natural gas, for an initial US$696
million upfront plus further payments that would be triggered in
the future.
The deal sets Woodside up to be the operator of any liquefied
natural gas development of the field.
The company said an agreement in principle has been signed with
Leviathan venture partners Noble Energy Mediterranean Ltd., Delek
Drilling LP (DEDR.L.TV), Avner Oil Exploration LP (AVOGF)) and
Ratio Oil Exploration (1992) LP (RATI.L.TV) to buy an interest in
the two petroleum licenses that contain the field.
Noble Energy, which targets initial production to the domestic
gas market in 2016, will remain the main operator.
"We have a proven track record of safe and reliable operations
in Australia and being selected as the Leviathan joint venture's
preferred partner in a competitive bidding process demonstrates the
value of our LNG development capabilities," said Peter Coleman,
chief executive of Woodside.
The company said the agreement involves the initial payment,
with staged payments of US$200 million once laws permitting LNG
exports from Israel are in force and US$350 million on a final
investment decision relating to an LNG development. Woodside also
faces potential annual LNG payments equal to 11.5% of its revenue
above an agreed escalating price threshold but capped at US$1
billion, and up to US$50 million relating to costs associated with
the drilling of a deep water exploration well for late 2013.
The deal is subject to a number of conditions, including the
completion of due diligence and necessary government and regulatory
approvals. If it goes ahead, Noble Energy's interest in the
Leviathan venture will fall to 30% from 39.66%, Delek and Avner
will each own 15%, down from 22.67% currently, and Ratio's interest
will drop to 10% from 15%.
Write to Robb M. Stewart at robb.stewart@wsj.com
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