The letter stated that on Tuesday September 8, Oil Search announced that it has received a non-binding conditional indicative proposal from Woodside under which Woodside would acquire all the shares in Oil Search for a consideration of one Woodside share for every four Oil Search shares held.
It stated that the proposal was subject to the following condition;
- Completion by Woodside of satisfactory due diligence on Oil Search;
- Execution of a mutually acceptable confidentially agreement;
- Oil Search granting an agreed period of exclusively;
- Oil Search obtaining support from key stakeholders and shareholders; and
- Woodside being satisfied that the transaction is likely to be supported by PNG on acceptable terms.
Following a detailed evaluation by the company, in conjunction with their financial and legal advisers, the board has concluded that the proposal is highly opportunistic and grossly undervalued the company.
The proposal would significantly alter the fundamental characteristic of an investment in the Company and dilute the present growth profile to the shareholders.
"Since receiving the Proposal, the Company has undertaken substantial shareholder engagement. The overwhelming feedback has been that this Proposal has little merit. Consequently, the board has unanimously decided to reject Woodside’s proposal.
"Oil Search is a pure PNG oil and gas play with clear growth opportunities and an excellent track record of delivery. The proposal would significantly alter the fundamental characteristic of an investment in the company and dilute the present growth profile available to its shareholders.
Oil Search has a material equity position in the world class PNG LNG Project and in attractive, low cost, LNG growth opportunities. These include the expansion of the PNG LNG Project through debottlenecking, the construction of a third LNG train and the development of the proposed Papua LNG Project. This, combined with the Company’s low cost oil production and an extensive and high quality exploration portfolio, provides substantial scope for capital growth, with the potential for production to double from current levels by the early 2020s. In addition, with exposure to oil prices, through both its oil sales and LNG contracts, the Company is in a strong position to capitalise from a recovery in the oil price," the letter stated. Post Coureir