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The Sydney Morning Herald: Woodside soars on talk of merger with BG Group

Barry FitzGerald
Friday June 15, 2007

WOODSIDE shares have raced to an 11-month high in response to speculation that it could merge with London-based BG Group, creating a $90 billion global gas giant.

While firmer oil prices and yesterday’s broadly based bounce in equity markets helped, it was the speculation on the possibility of a merger with BG that fuelled the $1.84, or 4.3 per cent, rise for Woodside to $44.52 a share, valuing the Perth-based group at $30 billion.

The jump in share price came despite the broker’s report that triggered the speculation emphasising that it was looking at the merits of a merger between the two companies as a concept only.

Woodside has been considered off-limits to foreign groups ever since the Federal Treasurer, Peter Costello, banned a $10 billion bid by Shell in 2001 on national interest grounds.

Shell owns 34 per cent of Woodside and has long been touted as a potential buyer of BG, valued by the market at $63 billion.

The suggested pathway to gain clearance from Canberra this time around in any bid for Woodside involves the creation of a dual-listed company under which Woodside’s identity, Australian base and tax domicile would be preserved.

A combined BG/ Woodside could challenge for leadership of the global LNG industry, albeit with Shell as a major shareholder.

After the Canberra ban on a takeover by Shell, Woodside held talks with BHP Billiton and Santos about possible mergers, which in the case of BHP Billiton would have been limited to a deal involving its oil and gas division. But nothing came of those talks.

Woodside has since grown to be an annual producer of 68 million barrels of oil equivalent (2006), with output in 2007 forecast at 72-78 million boe for 2007.

BG is a much bigger company, with production in the first quarter of 58.2 million boe.

Woodside stepped up its exploration and development expenditure this year to $3.6 billion, with work starting on its Pluto LNG project.

It also has aggressive development plans for the Browse and Sunrise LNG projects.

http://www.smh.com.au/news/business/woodside-soars-on-talk-of-merger-with-bg-group/2007/06/14/1181414460328.html

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