Woodside’s Chief Coleman Says Considering Selling Stakes in Browse, Pluto
Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil and gas producer, may sell stakes in its Browse and Pluto liquefied natural gas ventures to help fund the developments as demand rises in Asia.
“We see interest starting to occur as people ask questions about these projects,” Peter Coleman, chief executive officer of the Perth-based company, said today in an interview in Sydney. “We can see that each time we hit a milestone. We’ll match that interest up with our funding requirements.”
Coleman, 51, who took control of Woodside in May, plans to develop an estimated A$75 billion ($79 billion) in Australian LNG projects with existing partners including BP Plc and Chevron Corp. (CVX) The company aims to approve the Browse venture in mid-2012 and expects to develop a second stage at Pluto after the A$14.9 billion project begins exports in March.
“With Browse and Pluto, it would make sense to sell down some equity if the price was good,” John Hirjee, a Melbourne- based analyst at Deutsche Bank AG, said by phone today. ConocoPhillips (COP) and Total SA are among companies that may be interested in acquiring stakes, he said.
Woodside fell 2.4 percent to A$36.87 at the 4:10 p.m. close in Sydney, compared with a 1.2 percent drop in the S&P/ASX 200 Index. The shares have dropped 13 percent this year.
Global trade in natural gas increased 10 percent last year from 2009 as energy use soared, BP said in July, with LNG shipments gaining 23 percent. Royal Dutch Shell Plc (RDSA), Chevron and Santos Ltd. are among producers building or planning almost A$250 billion in LNG projects in Australia, Deloitte Access Economics said last month in a report.
Woodside owns 50 percent of Browse, to be built in Western Australia, with partners BP, Chevron, Shell and BHP Billiton Ltd. (BHP) holding the balance. Woodside owns 90 percent of Pluto, also in Western Australia, while Tokyo Gas Co. and Kansai Electric Power Co. each has 5 percent. It’s also planning the Sunrise venture in the Timor Sea with partners including Shell and ConocoPhillips.
“This is a good time to have that amount of equity because we’re at the low-spend part of the projects and we’re adding value,” Coleman said, declining to say when, or how much of the ventures, Woodside may sell. “It’s a matter of knowing how long to hold your cards. I have a good hand.”
Exxon Mobil Corp. (XOM) and Melbourne-based BHP, Australia’s biggest oil and gas producer, may each get a stake in Pluto in return for supplying gas to the venture from their Scarborough field off the Western Australian coast, Commonwealth Bank of Australia analysts said in a June report. The Pluto project is located in Karratha, about 1,600 kilometers (994 miles) north of the state capital Perth, while a site 60 kilometers north of the town of Broome has been selected for Browse.
Woodside would likely keep at least a third of Browse and Pluto, maintaining the largest positions in the ventures, Deutsche Bank’s Hirjee said, adding some of its current partners may be interested in increasing their stakes. “There’s also little doubt these days that customers want a small chunk of equity.”
BHP in April doused speculation it plans to buy Shell’s remaining stake of 24 percent in Woodside and make a takeover bid. The Hague-based Shell sold a 10 percent stake in Woodside last year for about $3.3 billion.
“I would hope Shell would stay with us and see the value in staying with Woodside,” Coleman said. “If they did choose to exit, that’s Shell’s decision, and I’m sure they would do that in a way that would ensure it was beneficial for everybody.”
The market for the fuel has been “tightening up” since the Fukushima nuclear disaster in Japan, Coleman said, adding he had met with LNG customers in Japan, China and Taiwan since joining the company. Australian gas projects will likely benefit as countries delay nuclear power expansion plans after the March 11 earthquake and tsunami that crippled the Fukushima Dai-Ichi power station in Japan, Chevron said in April.
“In the long term, we’ll see countries looking at their energy mix, and our view is that they are going to bias that more and more toward LNG, and that’s going to put Woodside in a position to meet that market,” Coleman said.
Browse may cost A$38 billion, while a second Pluto processing unit may cost A$10 billion, Deutsche Bank estimated in a report this month. Sunrise may cost about $13 billion, according to the report.
Woodside completed an agreement in June that provided more than A$1 billion of benefits to indigenous groups in Western Australia and cleared the way for the Browse development. The accord gives the company access to land in the Kimberley region where the proposed plant will be build.
“That was important for us,” Coleman said. “That sent a message out to the marketplace.”
Woodside sold $700 million of 10-year bonds in the U.S. in May with a coupon of 4.6 percent. Moody’s Investors Service said in June it may cut Woodside’s Baa1 credit rating after the company announced a further delay and cost overrun at Pluto.
“We were able to raise debt at very, very competitive rates, so the market is seeing the value of Woodside and its underlying business,” Coleman said. “We don’t have any concern at all that we’ll be able to go out and get very competitive rates in the marketplace to fund our programs.”
Coleman, former vice-president of Exxon Mobil Development Co. and a 27-year employee at the company, was born in Australia’s Victoria state and educated at Monash University and Deakin University. He succeeded Don Voelte as Woodside CEO.
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