How Geoff Donaldson tamed Australia's wild west

Australia owes a lot to Geoff Donaldson's pioneering achievements with Woodside, which still hold lessons for boards of low-priced miners.

Each week CSL and Woodside vie for the 10th place among Australia’s top 150 listed companies.

Both owe their pre-eminent position to a single person. In the case of CSL, it is Brian McNamee. In the case of Woodside it is Geoff Donaldson.

McNamee retired last month. Geoff Donaldson died a few days ago aged 99.

McNamee’s achievements have been well-documented (Exit the king: McNamee’s mastery, June 17). But the achievements of Woodside’s Donaldson are not as well known. Although they belong to a different era the techniques of Donaldson to keep alive a lowly capitalised stock like Woodside should be followed by all boards of low-priced miners – to the extent that today’s rules make it possible.

Donaldson believed that Australia had oil and gas and in 1956 he was excited by the prospect of finding the source of the Gippsland (Victoria) oil seeps, which were extracted during the Second World War oil shortages.

I can still remember as a young reporter going to Gippsland to be there for the ‘spudding in’ of Wellington Park No.1 well in Gippsland in the early 1960s. Woodside’s chairman Donaldson was a stock broker who could distill the ideas of geologists into simple concepts. He told me that if Wellington Park failed to find oil then the oil was in Bass Strait. Woodside had leases on the Bass Strait coast but the main Bass Strait ground was held by BHP.

The Wellington Park well was dry and Woodside chairman Donaldson and his chief executive partner Rees Withers believed that, given the Rough Range oil discoveries in Western Australia in the 1950’s, the North West shelf was highly prospective, so they pegged vast areas.

Donaldson’s great skill was to tap the capital markets for as much money as he could when markets were buoyant and then hang onto the money in the tough times. He would farm in parts of his leases to the majors but he tried to keep Australian control. And I am sure Geoff would not mind me saying that he extended to the limit all the liberties the law would allow to raise capital and keep Australian control. He sailed close to the wind in the interests of Woodside and the nation. Accordingly, he was not part of ‘the establishment’.

During one boom he floated Mid-Eastern group to raise money for the North West shelf. Once discoveries came on the shelf, Donaldson fought with all the skill and vision he could muster to keep it under Australian control. One of former Treasurer Peter Costello’s greatest decisions was to block the Shell bid for Woodside, which was priced far too low. One of BHP’s worst decisions was to sell part of its Woodside stake after the BHP crisis hit in the 1990s.

Australia owes a great debt to the late Geoff Donaldson.