Woodside Says No Takeover Offer from ExxonMobil

Woodside Energy Group said it was not in discussions with Exxon Mobil Corp. over a potential takeover, while an analyst said any deal would likely face regulatory hurdles if it came to fruition.

Exxon is studying potential acquisition targets including Woodside as it looks for further scale in the liquefied natural gas sector, people familiar with the matter told Bloomberg. The discussions are internal, and at an early stage, they said. 

Woodside is not aware of an incoming bid and confirmed it had not been in discussions with Exxon to date, the company said in a statement Monday.

Any such bid by Exxon for Woodside would face significant challenges from a regulatory perspective, as Australia only has two listed major energy producers, and the government may be unlikely to approve the biggest of them leaving the local bourse.

"The test would be: what's the competitive nature of the acquisitions, and are they able to enhance competition, or at least support it at current levels," said Rick Wilkinson, chief executive officer of industry consultant and research firm EnergyQuest.

"Foreign Investment Review Board and competition concerns would both come up. Either one might be triggered by any interest from Exxon for an Australian company like Woodside." 

The last time an international super major made a tilt at Woodside was in 2001, when British-Dutch multinational Shell Plc attempted a $3.2 billion billion takeover. Today, Woodside had a market capitalization of A$56 billion ($40 billion). 

That deal was scuppered when then-Treasurer Peter Costello opposed it saying it wasn't in the national interest. The government held concerns that Shell would prioritize investment internationally, over Australia, something Shell's Australian Chairman Peter Duncan denied. 

Shell grew its portfolio in Australia nonetheless, and the majority of its LNG portfolio is now derived from the country. 

Exxon's Strategy

For Exxon, a deal of this magnitude would supercharge its strategy to grow exposure in gas over oil. While it has a higher valuation to Shell, BP Plc, and other major energy companies, it has traditionally lagged them in geographical spread and volumes of LNG exports.

The American oil giant currently operates the PNG LNG venture in Papua New Guinea, and has stakes in Qatar's export plant. It is a partner in the Golden Pass facility in the US, which is currently being commissioned, and has a wider growth strategy with plans to develop a project in Mozambique. 

Acquiring Woodside would give Exxon assets spanning Western Australia, where Woodside operates the Karratha gas project and the North West Shelf project, which combined supply about 6 percent of the global LNG market in 2020. 

That share of global supply is only expanding as Woodside prepares to bring its massive Scarborough gas project in the region online later this year, while also pursuing longer-term expansion with the Browse gas fields nearby. Additionally, it is developing an export facility in the US state of Louisiana.

Notably, these assets are mostly located in Australia and the US, two geographical locations regarded as safer than the Middle East where the war between the US and Iran has strangled global oil and LNG supplies. 

Since completing its $60 billion acquisition of Pioneer Natural Resources in 2024, Exxon has continued to seek further expansion opportunities. It’s become more focused on an LNG deal since the start of the war in Iran earlier this year, the people familiar said. 

Shares in Woodside closed down 5.7 percent in Sydney. Santos Ltd., Australia’s other big listed energy company, fell even further on news the US and Iran had reached an agreement to reopen the Strait of Hormuz.