Financial Times: Woodside links up with Explore: “The decision comes as the once heavily Australia and gas-focused group, in which Royal/Dutch Shell has a 34 per cent stake, has intensified its efforts to diversify internationally and to lift its oil production. Its initial moves into Mauritania have encountered considerable success.” (ShellNews.net) 6 Jan 05
By Virginia Marsh in Sydney
Published: January 6 2005
Woodside Petroleum has decided to retain its business in the Gulf of Mexico, saying yesterday it had formed an alliance with a new boutique exploration group, in a move aimed at strengthening its position in the region.
The Perth-based group, Australia's largest independent oil and gas producer, said it would pool its exploration, acquisition, development and production activities in the region with Explore Enterprises. Explore is a small, private Louisiana-based group set up in 2003 by a team of former executives and engineers from oil majors including Exxon, Amoco and Mobil.
The alliance, to which Woodside is committed for five years, is one of the first significant corporate initiatives since Don Voelte became the Australian group's chief executive last year. Mr Voelte, formerly head of exploration at Mobil, has worked with some of Explore's executives.
The alliance follows a six-month review of the group's business in the Gulf and a strategic decision that it needed either to scale up and make its operations in the region more competitive, or sell its assets there.
The decision comes as the once heavily Australia and gas-focused group, in which Royal/Dutch Shell has a 34 per cent stake, has intensified its efforts to diversify internationally and to lift its oil production. Its initial moves into Mauritania have encountered considerable success.
In the Gulf, Woodside will hold 95 per cent of the new alliance's combined interests with Explore paying to acquire 5 per cent of its existing leases in the Gulf, excluding its Neptune and Midway discoveries.
On leases where production projects materialise, Explore's share will rise to 12.5 per cent once Woodside has recovered its investments to date.
Explore will pay its share of future expenses but will receive a management fee from Woodside of about US$1m a year and will work exclusively for the partnership.
One of its first tasks will be to review Woodside's 170 leases in the Gulf, which cover about 1,500 square miles, as well as the group's local staff.
The region has been allocated 14 per cent of Woodside's total exploration budget of A$275m (US$210m) for this year, although the company said its share could change following the agreement.
Bill Bethea, Explore's chief executive, said Woodside had accumulated an outstanding set of exploration assets in the Gulf and that by adding his team's local knowledge and expertise the two companies could build a "substantial business".
Analysts said the alliance seemed a sound move and the shares closed unchanged at A$19.99 in a falling market.
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