Woodside Leviathan deal uncertain
Woodside announced in December it had paid $US696 million to Noble Energy for a 30 per cent stake in Leviathan, and would build and operate an LNG plant in Israel, making further payments after milestones including export and final investment approvals.
Woodside has yet to make its initial payment but in the US on Wednesday chief executive Peter Coleman was forced to respond to media reports that the head of the Israel Antitrust Authority would soon rule a cartel existed between Noble and its partners in the Leviathan field, including Delek Drilling.
The authority has previously found a cartel existed between Noble and the same partner in the Tamar field, and Israel's Haaretz newspaper said the Leviathan decision could shock the energy industry, and potentially force the partners to sell the gas in the field separately or sell their holdings in the field to a third party.
Mr Coleman told reporters on the sidelines of an oil and gas conference in Houston that he was confident Woodside's deal with Noble would be finalised and said the regulator's reasoning "goes a little further than our understanding of what the law says".
Woodside shares were unchanged at $37.15.
One analyst speaking off the record said it would be a significant blow to Woodside's strategy - and to Mr Coleman's leadership - if the Leviathan deal unravelled, given it was a crucial new expansion project for the cashed-up company.
The analyst questioned the rationale for an adverse antitrust ruling against Noble and its partners, saying, "It's a bit harsh for the regulator to claim that these guys have a monopoly power because they were so successful with the drill bit.
"I've never ever heard of anything like this before ... does that mean ENI and Anadarko can be alleged to have monopoly power in the Mozambique gas market because they made all the discoveries offshore?
"It's just confirmation of the risks that exist with big discoveries in new regions that haven't formulated policy.
"Clearly Woodside cited that as a risk when they went in, and structured the deal.
"From a valuation perspective it's not enormous, but from a strategic perspective it is absolutely key.
"This is a company that see themselves as a growth company and yet they don't have any near-term growth projects that have really got much traction. Leviathan was supposed to [solve] that."
Frequently Asked Questions about this Article…
Woodside agreed to invest in the Leviathan gasfield in Israel, with the overall transaction described as about US$1.3 billion (A$1.27 billion). The company announced in December it had paid US$696 million to Noble Energy for a 30% stake and would build and operate an LNG plant in Israel, with further payments tied to milestones such as export approvals and final investment decisions.
Israeli media reported the head of the Israel Antitrust Authority may rule that a cartel existed between Noble Energy and its partners in the Leviathan field (including Delek Drilling). The authority previously found a cartel between the same partners in the Tamar field, and a similar ruling for Leviathan could force partners to sell gas separately or sell their stakes to a third party, creating uncertainty for the Woodside transaction.
Yes. Woodside CEO Peter Coleman told reporters he was confident the deal with Noble would be finalised and said the regulator’s reasoning 'goes a little further than our understanding of what the law says.'
According to the article, Woodside shares were unchanged at $37.15 amid the reports about potential antitrust action in Israel.
Published reports suggest an adverse ruling could force the Leviathan partners to sell the gas in the field separately or sell their holdings in the field to a third party, which could complicate or change the structure and economics of Woodside’s planned investment and LNG development.
Analysts quoted in the article say Leviathan is strategically key for Woodside. While the immediate valuation impact might not be enormous, the project was seen as a crucial expansion to deliver near‑term growth for the company; losing it would be a significant blow to Woodside’s strategy and to CEO Peter Coleman’s leadership.
An analyst noted this situation highlights risks that come with big discoveries in regions that have not yet formulated clear policy. They questioned whether an adverse antitrust ruling was appropriate and warned such regulatory uncertainty is a real risk for companies investing in major new projects.
Investors should monitor updates from the Israel Antitrust Authority about any formal decision, statements from Woodside and Noble Energy on the transaction milestones (initial payments, export approvals, and final investment decision), and any commentary from analysts about the strategic impact — since those developments will directly affect the deal’s likelihood and potential impact on Woodside’s growth plans.
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