BHP Billiton Shoots Down Woodside Speculation

MELBOURNE (Dow Jones Newswires), Apr. 11, 2011

BHP Billiton on Monday quashed speculation it is preparing a multibillion-dollar bid for Woodside, even as an Australian state premier said he was directly aware of moved by unspecified companies to take over the gas producer.

BHP said in a brief statement said it knows of no basis for the speculation and that the market is "currently fully informed of all material information."

Speculation has been growing since Woodside's largest shareholder, Shell, sold some of its investment in the Australian company. Analysts have suggested BHP Billiton is a natural suitor for Woodside given its desire to expand its own oil and gas operations and Australia's reluctance to let key strategic assets fall into foreign hands. Shell's 2001 attempt to acquire Woodside outright was knocked back by Australian lawmakers on national-interest grounds.

Colin Barnett, premier of resource-rich Western Australia state, said in a press conference at an energy conference in Perth he is aware of takeover moves for Woodside as well as media reports of BHP's interest. He didn't give specifics about the companies involved.

"Woodside seems to be under siege," said Barnett in a speech given earlier in the day to energy industry executives at the conference. "I just urge you, hands off Woodside."

Woodside Chief Executive Don Voelte said the company continued to discuss with Shell how it would sell its remaining 24% stake in Woodside, but he has no knowledge of a takeover bid. "With the continuous disclosure laws in Australia, we can't hide this stuff," Voelte told reporters.

A spokeswoman for Shell in Perth declined to comment.

BHP Billiton on Monday completed the Australian off-market portion of a planned US$10 billion buyback program, buying US $6.3 billion in its own shares at a 14% discount to the market price.

The Melbourne-based company has bought US $7.8 billion in shares in Australia and the U.K. since it reinstated a buyback program late last year after abandoning a US $38.6 billion bid for Canada's Potash Corp of Saskatchewan (POT). It said it expects to repurchase a further US $2.2 billion in shares before the end of 2011.

In its statement on the Woodside speculation, BHP said it hasn't relied on a confidentiality exception in Australian listing rules. Under those rules, a repurchase program would require full disclosure from a company on anything that might affect its share price.

Woodside has four operating or planned gas-export projects that face Asia, at a time when major markets including China are striving to minimize use of coal and crude oil because of worsening pollution, and scrutiny of nuclear power is intensifying in the wake of the crisis at Japan's Fukushima nuclear plant, damaged in last month's earthquake and tsunami.

Shell in November sold a 10% stake in the Perth-based company for about US $3.3 billion, sparking speculation that BHP might buy Shell's remaining 24% stake in Woodside and launch a takeover bid.

BHP's relationship with Woodside dates back decades, and both are involved in operating the North West Shelf liquefied natural gas terminal in Western Australia state and the proposed Browse LNG project nearby. The companies' boards know each other well--Woodside Chairman Michael Chaney was a director of BHP between 1995 and 2005.

Woodside's shares have risen about 12% since the start of the year.

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