SYDNEY, Australia—Australia's Woodside Petroleum Ltd. said Monday it has agreed to buy Royal Dutch Shell PLC's oil assets in Australia's North West Shelf for US$398.5 million (euro274.6 million).
The deal will double Woodside's share of the oil output from the North West Shelf project, including the Cossack Pioneer field, which produces 80,000 barrels of oil a day.
Woodside Chief Executive Don Voelte said the acquisition will boost the company's cash flow and earnings.
"The North West Shelf has laid a sound business platform for Woodside over two decades and we are very pleased that this transaction will further consolidate our position in the North West Shelf ventures," Voelte said in statement.
Woodside is the operator of the 20 billion Australian dollar (US$17.9 billion; euro12.3 billion) North West Shelf joint venture and has an equal stake with partners Chevron Corp., BHP Billiton Ltd. (BHP), Royal Dutch Shell and Japan Australia LNG.
The NWS venture accounts for more than 40 percent of Australia's oil and gas production and is a major producer of liquefied natural gas, natural gas, liquid petroleum gas and crude oil.
For Shell, the disposal of its NWS oil assets frees it up to focus on its Australian natural gas business, which includes the giant Gorgon gas field off the Western Australian coast that recently won federal approval.
In a related agreement, Shell will have a "right of final offer" for Woodside's assets in Libya should Woodside agree to proceed with a sale, Woodside said. Woodside has previously said it is examining its options for its remaining African assets, including selling them.
Shell's North West Shelf oil assets include its share in the Cossack, Wanaea, Lambert and Hermes oil fields. The sale will increase Woodside's participating interest in these assets to 33.3 percent.
The agreement covers estimated proved and probable reserves of 21.3 million barrels of oil equivalent, and an additional 9.3 million barrels of contingent resources. The purchase price is equivalent to US$18.71 (euro12.89) a barrel of oil equivalent for proved and probable reserves.
The North West Shelf oil asset transfer is subject to standard regulatory and joint venture participant approvals. Approvals by Woodside shareholders and the boards of both companies are also required, Woodside said.
Woodside shares fell 2.1 percent Monday to A$43.92, keep pace with the same percentage loss in the benchmark S&P/ASX 200 index.
