The timing was no doubt coincidental; around a week ago Woodside revealed that lower world oil prices, a small dip in output and the impact of the high Aussie dollar had chopped more than $700 million from its 3rd quarter sales revenue.
And yesterday it revealed it was planning to sell its interest in the Otway basin gas project, offshore Victoria, to Origin Energy for a similar amount: $712.5 million.
Coincidence no doubt, but Woodside does have ambitious LNG plans in WA, such as the developing Pluto project, and they take money.
Last week’s fall in revenue wouldn’t have been a shock, possibly what would have made it hurt a bit more would have been the rise in the value of the Aussie dollar in the quarter.
That saw September quarter sales total $1.064 billion, down from the $1.744 billion for the same quarter of 2008 when global oil prices peaked in July of that year around $US147 a barrel.
But encouraging, as that was up 13% from the second quarter’s $938 million to the September figure of $1.064 billion.
Woodside Petroleum says it is selling its 51.55% in the Otway Gas Project to its joint venture partner, Origin Energy, for $712.5.
Woodside’s deal was liked by the market. The shares rose 54 cents on a day when the market fell 2.2% overall. The shares closed up 1.1% at $48.24.
Origin shares shed 11 cents to $15.96, so they outperformed the wider market as well.
Woodside said in its statement the transaction included its interest in the Otway Basin offshore and onshore facilities and permits.
In a separate statement, Origin’s managing director, Grant King, said the transaction included production licenses including the Thylacine and Geographe fields and adjacent exploration permits, together with associated offshore production facilities, pipelines and onshore gas processing plant.
"As an existing joint venture party with a 30.75 per cent interest in the Otway Gas Project, we have undertaken the purchase with detailed knowledge of the asset, reserves, infrastructure and potential of the surrounding acreage," Mr King said.
"The Otway Gas Project is a premier asset with established production.
"Increasing our interest in the project provides additional earnings from natural gas sold under existing long term contracts to TRUenergy as well as from LPG and condensate sold from the liquids-rich gas stream.
"Importantly, it also provides greater access to the growth potential and exploration upside of the area."
Origin Energy will finance the deal out of the cash left over from its sale of half its coal seam gas assets to Conoco Phillips last year.
Origin said the money would be drawn from its $4.4 billion of cash reserves as at September 30, as well as undrawn bank facilities. (There are tax advantages in using borrowed funds.)
Woodside said the effective date of the transaction was July 1, 2009, with the transfer of ownership expected to occur next month, subject to a pre-emption process under the joint venture agreement and normal regulatory approvals.
The pre-emptive rights are held by the joint venture parties, which include Benaris International NV and CalEnergy Gas (Australia) Ltd.
Origin says that if these rights are exercised, the parties may elect to proportionally increase their interest in the joint venture on terms equivalent to that agreed in the Woodside-Origin transaction.
When the deal is completed, Origin will become the operator of the Otway project, with the transition expected to occur by the second quarter of next year (I.e. in 12 months time).
Woodside said the sale of Otway was consistent with Woodside’s previously announced strategy of reviewing non core assets.
And gaining a handy $700 million into the bargain.
Origin’s Mr King said the transaction would be add to earnings in the first full financial year following completion.
