SYDNEY--Woodside Petroleum Ltd. (WPL.AU) said it would
renegotiate a deal to buy a stake in the world's biggest deepwater
natural gas find in a decade, including paying a higher price than
previously planned.
The Australian company has signed an initial agreement with
owners of the Leviathan natural gas field offshore Israel, which
include Noble Energy Inc. (NBL) and Delek Drilling L.P.
(DEDR.L.TV), to take a 25% stake in the asset. A previous deal
agreed in December, 2012, involved Woodside purchasing 30% of the
discovery.
The move reflects higher estimates of the size of the Leviathan
discovery. Investors now think the field may have as much as 18.9
trillion cubic feet of natural gas, compared with an earlier
assessment of 17 trillion cubic feet.
Woodside said the parties plan to negotiate a "fully termed"
agreement by Mar. 27.
The Perth-based company has been scouring the world to buy oil
and natural gas discoveries after a series of setbacks in
Australia, including a delay to the multibillion dollar Browse
liquefied natural gas project, that has raised doubts about its
ability to grow output over the next few years.
The memorandum of understanding involves Woodside making an
upfront payment of US$850 million to get involved in Leviathan,
compared to a previous US$696 million.
Another US$850 million payment would occur if a final investment
decision is made to build a liquefied natural gas, or LNG, terminal
to export some of the resource. Further payments would include
5.75% of Woodside's export gas revenue capped at US$1.3 billion, a
royalty of 2.5% paid on oil production, and a one-time payment of
US$50 million if the resource estimate rises above 20 trillion
cubic feet.
Natural gas from Leviathan would used to meet Israel's domestic
needs, and potentially supply foreign consumers, Woodside said.
Write to Ross Kelly at ross.kelly@wsj.com
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