Woodside's bid for Oil Search
Recommendation
- {{x.value}}
{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter verification code' }}
{{ completedStep1 ? 'Authentication & Security' : content.trialHeading.replace('{0}', user.FirstName) }}
{{ content.upgradeHeading.replace('{0}', user.FirstName) }}
The email address you entered is registered with InvestSMART
Please login to continue
We have sent you an email with the details of your registration.
Looks you are already a member. Please enter your password to proceed
{{ upgradeCTAText }}
Updating information
Please wait ...
Your membership to InvestSMART Group recently failed to renew.
Please make sure your payment details are up to date to continue your membership.
Having trouble renewing?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
You've recently updated your payment details.
It may take a few minutes to update your subscription details, during this time you will not be able to view locked content.
If you are still having trouble viewing content after 10 minutes, try logging out of your account and logging back in.
Still having trouble viewing content?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial
Please click on the ACTIVATE button to finalise your membership
Unsuccessful registration
Registration for this event is available only to Eureka Report members. View our membership page for more information.
Registration for this event is available only to Intelligent Investor members. View our membership page for more information.
- You are already registered for this event.
- This event is already full.
- Please select a quantity for at least one ticket.
- {{ i }}
Forgotten password
Please enter your email address below to request a new password
- Indepth analysis of ASX listed shares
- BUY, Hold and Sell Recommendations
- Ideas Lab
- Special Reports
- Alan Kohler’s Weekend Briefing
- Interviews with CEO’s & top influencers
- Money Cafe and Talking Finance
- Super Advice and Q&A with Ask Alan
Oil Search and Woodside Petroleum have announced that they're in talks about a potential merger although, so far, no deal has been struck. The proposal involves Woodside paying 0.25 shares for every share of Oil Search, valuing the driller at $11.7bn.
Predictably, Woodside's share price fell and Oil Search's surged to close above the implied bid price of about $7.70, suggesting the market expects a better offer to come. We concur.
Oil Search's partner at PNG LNG, ExxonMobil may have first rights to the asset so its reaction will be crucial to the success of the bid. Also important will be the response of the PNG government, which owns a 10% stake in Oil Search. It is hard to see the bid succeed without their approval.
The proposal is an excellent idea, especially for Woodside, which boasts high cash flow but few places to reinvest it. PNG LNG has several high returning growth options that would suit Woodside while the political risk of the project would be diluted within a larger, more stable production portfolio. If it happens at a decent price, the proposal makes Woodside far more attractive.
The price is likely to be the sticking point and, with PNG LNG boasting exceptional returns and further growth options, the proposed price is unlikely to be accepted at current prices.
Buying Oil Search would be one of the largest takeovers in Australian history and dramatically change Woodside. Today's recommendation guide does not reflect the combined group so we are removing price guides for now. For both Woodside and Oil Search, HOLD.
Call 1300 880 160
Start a chat
Schedule a call
