Australian petroleum exploration and production company Woodside Petroleum has offered to buy the Papua New Guinea-focused oil and gas company Oil Search for A$11.6bn ($8.1bn).
Under the proposal, each shareholder of Oil Search are expected to receive 0.25 Woodside shares for every Oil Search share and will also become shareholders in the combined entity.
The non-binding proposal is subject to due diligence completion by Woodside on Oil Search, execution of agreement, Woodside being satisfied that the transaction to be supported by the PNG Government as well as Oil Search granting an agreed period of exclusivity and securing stakeholders and shareholders support.
Upon satisfying the conditions, the deal would be further subject to approval from Oil Search shareholders, Court and Papua New Guinea regulatory bodies.
The proposal is a part of Woodside’s effort to boost core assets value while leveraging its capabilities and portfolio.
Oil Search selected Morgan Stanley as its financial advisers for the proposal while Woodside selected Bank of America Merrill Lynch and Gresham.
Oil Search has 29% stake in the PNG liquefied-natural-gas development, which is operated by Exxon Mobil as well as stakes in other fields in the area, including the Elk-Antelope gas field being developed by Total in Papua New Guinea.
The company also holds exploration interests in the Middle East and North Africa, reported The Wall Street Journal.
Image: Woodside’s Karratha Gas Plant in Australia. Photo: copyright © Woodside 2015.