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Bloomberg: Woodside to Buy Shell’s North West Shelf Oil Stakes (Update4)

By Madelene Pearson and Sophie Tan

Feb. 11 (Bloomberg) — Woodside Petroleum Ltd., operator of Australia’s North West Shelf venture, agreed to buy Royal Dutch Shell Plc’s oil stakes in the partnership for $398.5 million, boosting output and reserves in its largest project.

The assets include stakes in the Cossack field and the Egret discovery, both off Australia’s northwest coast, Perth- based Woodside said today in a statement. Under a related accord, Shell will get the final rights to buy Woodside’s Libya assets.

Woodside has sold its share in the Chinguetti oil project in Mauritania to concentrate on developing assets in its home base of Australia. Buying Shell’s North West Shelf oil stake will boost Woodside’s cash flow and earnings, Chief Executive Officer Don Voelte said. The A$20 billion ($17.9 billion) North West Shelf venture is the nation’s largest resource project, accounting for more than 40 percent of oil and gas output.

“It is a good deal for Woodside based on our calculations. Woodside is already in the venture and as the operator, it knows how to extract value out of the assets more than anybody else,” said Gordon Ramsay, a Melbourne-based oil analyst at UBS AG.

Woodside earned A$431 million from North West Shelf oil sales in 2007, while liquefied natural gas revenue was A$738 million, according to a company report on Jan. 17.

“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 the statement.

Shares Decline

Woodside fell 93 cents, or 2 percent, to A$43.92 on the Australian Stock Exchange in Sydney. The stock has gained 20 percent in the past year, compared with the 5.5 percent drop in the benchmark S&P/ASX 200 Index.

The agreement covers Shell’s stakes in the Cossack, Wanaea, Lambert and Hermes oil fields, including the Cossack Pioneer production facility, Woodside said.

The purchase price is equivalent to $18.71 a barrel, Woodside said. The fields can produce 150,000 barrels of oil a day, according to the company’s Web site. The venture is located about 112 kilometers (70 miles) northwest of Karratha in the north of Western Australia.

BHP Billiton Ltd., BP Plc, Chevron Corp., Woodside’s 34 percent shareholder Royal Dutch Shell and a venture between Mitsui & Co. and Mitsubishi Corp. have stakes in the project.

Libyan Venture

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, as at Aug. 1, 2007, the company said in the statement to the exchange.

Under a related accord, Shell will have a “right of final offer” for Woodside’s assets in Libya, should it go ahead with a sale, the company said. Woodside has said it’s studying options in relation to its remaining African assets, which may include a sale.

“The statement about the sale of the Libya assets is cheerfully worded,” said UBS’s Ramsay. “Woodside still needs to do more work to sell the assets. It is an opportunity for Shell down the road.”

To contact the reporters on this story: Madelene Pearson in Melbourne on [email protected] ; Sophie Tan in Singapore at [email protected]

Last Updated: February 11, 2008 00:29 EST

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