Woodside Petroleum shares survived the impact of the surprise sell down by Royal Dutch Shell of around a third of its 34% stake.
The shares dropped 6.8% to $42.75 this morning after Shell completed the sale of the 10% stake before trading started.
They recovered slowly during the rest of the day, thanks in part of the world oil price nudging $US87 a barrel and a feeling that although an expensive punt, that someone like BHP Billiton might be tempted to bid.
The shares ended down 6.2% on the day, or $2.87 at $42.99.
But BHP Billiton shares dropped 1.1% to $44.64 (a fall of 52c) as investors remained cool on the idea of a bid.
Shell placed 78.34 million shares, worth $3.3 billion as it starts to change its strategy towards direct stakes in developments, rather than indirect stakes via shares in other companies.
Woodside shares had closed Monday at $45.86, or around $36 billion.
A takeover would have to happen well north of that price, unless it was a very friendly arrangement with the acquirer offering equity and market commentaries yesterday talked of a bid well over $A40 billion.
And if BHP wants to bid, it’s only a question of price, the market seems primed for a bid, but if it happens, it probably won come until the end of next month, after BHP has finalised its abortive tilt at PotashCorp in Canada.
Woodside produces about 222,000 barrels a day of oil and, mostly off the WA coast, but also from holdings in the Gulf of Mexico.
The company operates the Northwest Shelf Project, responsible for 40% percent of Australia’s oil and gas output.
It was the first mega offshore energy project, now the likes of US group, Chevron plan two more.
The $43 billion Gorgon development is underway (Shell has a direct 25% stake in that) and the next will be even bigger and is called Wheatstone, which could cost closer to $A60 billion in today’s dollars (25 million tonnes of LNG a year against 16 million at Gorgon).
Besides Gorgon, Shell has growing interest in coal seam methane to LNG projects in Queensland via Arrow Energy, which it took over earlier this year in partnership with PetroChina.
It also has at least three small LNG projects off the WA coast that could be developed using floating LNG processing trains.
These projects form the bulk of the $A50 billion it plans to spend in Australia over the next decade.
