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Woodside Says It’s Not for Sale Amid BHP Speculation

By James Paton

Nov. 25 (Bloomberg) — Woodside Petroleum Ltd. Chief Executive Officer Don Voelte said Australia’s second-largest oil and gas producer isn’t for sale amid speculation of a takeover bid by BHP Billiton Ltd.

“Your question is do you plan to put the company up for sale?” Voelte said in an interview in Perth today when asked about reports of a potential offer. “The answer is no.”

BHP, the world’s largest mining company, may be interested in buying Woodside with the approval of 34 percent shareholder Royal Dutch Shell Plc, the Australian Financial Review’s Street Talk column said yesterday. Former treasurer Peter Costello blocked a $3.2 billion bid by Shell in 2001 to take control of Woodside, citing national interest.

“Shell may be a willing seller because they do have some quite big projects themselves up their sleeve,” Nick Raffan, a Sydney-based analyst at Fat Prophets, said by telephone today. “It wouldn’t surprise me, looking ahead to petroleum demand, and I’m bullish on the oil price long-term, it would probably make sense if they could do it at the right price.”

Shell, Europe’s largest oil company, expects spending on two gas projects in Qatar to be as much as $21 billion by the end of next year, according to presentations posted on the company’s Web site yesterday.

BHP is Australia’s biggest oil and gas producer and has an annual target for 10 percent growth in petroleum output.

Talks About ‘Business’

Sam Evans, Melbourne-based spokeswoman for BHP, and Claire Wilkinson, a Perth-based spokeswoman for Shell, both declined to comment.

Woodside rose 31 cents, or 0.6 percent, to A$49.41 in Sydney, compared with a 0.8 percent increase in the S&P/ASX 200 Index. The stock has gained 35 percent since the start of the year, compared with the benchmark’s 26 percent advance.

Voelte said he has had discussions with his counterparts at BHP and Shell. “We talk to them about business,” he said. “We don’t talk to them about takeovers or anything like that.”

Woodside attracts interest because of its potential for growth, he said. “If you go into a candy store, what jumps out first is the thing with the most chocolate and the prettiest,” he said. “Companies covet our assets, our capabilities and our expertise. But we don’t pay attention to it.”

In an earlier interview with Bloomberg Television, Voelte said Woodside was looking forward to remaining an independent company and that he hasn’t held any discussions with BHP Chief Executive Officer Marius Kloppers lately.

‘Great 55 Years’

“I think the best years are in front of us, we’ve had a great 55 years but the next 55 years as an independent Woodside are going to be great.”

An area where Voelte does anticipate consolidation is among Australian liquefied natural gas ventures. The government’s carbon pollution reduction scheme, revised yesterday, and higher labor costs will knock some projects out, he said.

“Wages, the CPRS, all of these are added costs you have to spread out over an awful lot of gas to make it pay off,” he said. While Voelte estimates there are 14 LNG projects proposed for Australia “not all of these are going to go. There are a few that will. These companies will have to learn to work together and share resources.”

Assistance to the industry under the government’s amended cap-and-trade carbon reduction plan is an improvement from the original proposal, he said.

‘We’ll Make Do’

“It provides us with certainty,” Voelte said. “We’re happy to live with that if this is the program the government is putting in. We got a fair hearing. We started at zero and ended up with something that gives us some buffer. We’ll make do.”

Even so, the system would force Woodside and its rivals in the resources industry to make changes. “We’ll have to be more creative and cut other costs,” he said.

Woodside may look beyond Australia for future funding needs, Voelte said, by tapping debt markets in the U.S. or Asia. The oil and gas producer sold $700 million of bonds in the U.S. earlier this month.

“We’ve tapped out Australia as far as you can tap it out,” he said. “We’ve had great support from the four pillar banks. Each one has done as much as they can do for us. We can tap the U.S. and Asia. A lot of people want to give us money. What we’re seeing is that the debt markets are still quite open to us.”

Woodside, seeking to expand its more-than A$12 billion Pluto LNG project in Western Australia, said it isn’t ruling out equity funding. “Right now, our funding plan is pretty well intact,” he said.

To contact the reporter on this story: James Paton in Sydney at [email protected].

Last Updated: November 25, 2009 02:06 EST

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