Woodside Petroleum Ltd. agreed to buy Exxon Mobil Corp.’s 50 percent interest in the Scarborough gas field off Western Australia as part of a A$2.5 billion ($2 billion) share sale that will shore up gas supplies for the nation’s biggest energy company.
By buying Exxon’s stake Woodside will control 75 percent of a permit containing the majority of the Scarborough gas field. The Australian producer will also gain a 50 percent interest in three more licenses with the deal set to complete by the end of March.
The move strengthens Woodside’s bid to pipe gas from the field to its Pluto liquefied natural gas plant at the onshore Burrup Hub rather than Exxon’s preference for a floating LNG plant. Woodside spent $400 million in September 2016 to buy half of BHP Billiton Ltd.’s stake in Scarborough, a remote offshore resource.
“Our Burrup Hub concept is advanced by our announcement today of an increased stake in the Scarborough gas field,” Chief Executive Officer Peter Coleman said in a statement. “The development concept involves maximizing existing infrastructure at the Pluto LNG plant to meet a market gap we expect will emerge from the early 2020s.”
The Perth-based energy producer has asked for trading in its shares to be paused until it announces the outcome of the institutional component of the raising. The company also announced full-year net income of $1 billion, in line with analyst estimates.
For Exxon, Scarborough’s once-promising trove of gas fell out of favor with the energy giant as more profitable, less risky LNG opportunities arose in places like Papua New Guinea and Mozambique. Still, the company remains wedded to the floating-production model: ships built to process and export crude are linchpins of Exxon’s plans to harvest massive offshore crude discoveries in Guyana.