Woodside to Buy Share in BHP's Western Australia Gas Assets for $400mn

Australian energy major Woodside has agreed to buy half of BHP Billiton’s Scarborough area assets in the Carnarvon Basin, located offshore Western Australia for $400mn.

On September 5, Woodside said the acquisition includes a 25% interest in WA-1-R and a 50% interest in WA-62-R, which together contain the Scarborough gas field. Woodside will also acquire a 50% interest in WA-61-R and WA-63-R which contain the Jupiter and Thebe gas fields.

Woodside will operate WA-61-R, WA-62-R and WA-63-R. ExxonMobil is the operator of WA-1-R.

Woodside will pay BHP Billiton $250mn on completion of the transaction and a contingent payment of $150mn upon a positive final investment decision to develop the Scarborough field. The effective date of the transaction is July 1, 2016.

Offshore rig

The Scarborough area assets include the Scarborough, Thebe and Jupiter fields, which are estimated to contain gross 8.7tn ft³ of gas resources out of which Woodside’s net share is estimated to be 2.6tn ft³.

Low energy and commodity prices have severely impacted both Woodside and BHP financially. Woodside remained in the black but saw its half yearly earnings drop a whopping 50% to $340mn owing to an average 26% decline in the realised oil price. The fall could have been worse if the company had not been able to inject greater efficiency in operations. It managed to cut unit production costs by a healthy 38%.

BHP has had a really bad year. It reported its first full year loss since BHP and Billiton merged about decade and half ago. It announced a record $6.4bn annual loss impacted primarily by bad bet on US shale. 

Shardul Sharma