The Board of Oil Search Ltd has unanimously rejected an approach from Woodside to acquire all the shares in Oil Search for a consideration of one Woodside share for every four Oil Search shares held.
Following engagement with its shareholders, Oil Search dismissed the proposal as “highly opportunistic”, stating that the bid grossly undervalues the company.
A statement from Oil Search read: “The proposal would significantly alter the fundamental characteristic of an investment in the company and dilute the present growth profile available to its shareholders.”
Oil Search has a material equity position in the PNG LNG project and in LNG growth opportunities, including the expansion of the PNG LNG project through debottlenecking, the construction of a third LNG train and the development of the proposed Papua LNG project.
Oil Search’s Chairman, Rick Lee, said: "The Board of Oil Search believes our company is in a very strong position, both operationally and financially. We have a low cost, high quality, production base which is generating strong cash flows and excellent growth opportunities, with the proposed PNG LNG Train 3 and Papua LNG among the most competitive new developments in the world. Oil Search provides its shareholders with a pure exposure to PNG and is fully committed to PNG. Our focus is on continuing to build and create shareholder value through the Company's strong future growth prospects.
“If any proposals are tabled in the future that reflect compelling value for Oil Search shareholders, we will engage on them. Clearly this proposal falls well short of that test.”
Oil Search has appointed Luminis Partners and Morgan Stanley as its financial advisers and Allens as its legal adviser.
Edited from press release by Callum O'Reilly