Woodside sells Enfield project

Australia's second biggest oil and gas company Woodside Petroleum has sold 40 % of its massive Enfield oil project off the West Australian coast to Mitsui for $ 464.5 mm (A$ 618 mm). The Perth company said the sale of a chunk of its WA-271-P exploration permit and associated Enfield production licence WA-28-L would give Mitsui E&P Australia a stake also in the nearby Laverda and Vincent discoveries.
Under the deal Mitsui will become a full joint venture participant in the permits, which Woodside has held since they were issued in 1997, and will participate also in future exploration and production within the acreage.

The sale announcement comes just weeks after Woodside decided to sink $ 1.48 bn into developing Enfield which has reserves estimated at more than 125 mm barrels of oil. Woodside's acting CEO, Keith Spence, said the sale was a key step in the company's growth strategy for the Greater Enfield Area.
"Our recent announcement to develop the Enfield oil project, and favourable market conditions, enable Woodside to realise immediate value from the sale while still maintaining significant exposure to the long-term growth potential of the Greater Enfield Area," Mr Spence said.

Paterson Ord Minnett oil analyst Simon Oaten said Woodside's stock was probably also boosted by the price Mitsui paid to become Woodside's joint venture partner.
"This is a good deal," Mr Oaten said. "I thought they would have done a deal with BHP Billiton -- given the immediate acreage to the north -- but it looks like this is stage one of possibly two developments at a rather nice price."
Daiwa Securities analyst Mark Pervan said bringing in a major player like Mitsui diluted the risk for Woodside.
"Mitsui's a proven joint venture partner in the market," Mr Pervan said. "When you're trying to farm-in somewhere amid $ 35 a barrel oil prices you're going to pay a good price."

The effective date of the transaction is January 1, 2004 and the sale is expected to close by the end of April 2004 -- once approvals have been obtained. Woodside has a long-established relationship with Mitsui through its involvement in the Woodside-operated North West Shelf Venture. Mr Spence said Mitsui brought particular experience in the Japanese oil market where most of the Enfield crude would be sold.
Mitsui, one of Japan's largest conglomerates, has an extensive energy group involved in international oil and gas exploration and production, marketing, oil refining and LNG operations, he said. Mitsui has an established presence in Australia also through the Wandoo, Cliff Head, Yolla and Casino projects.

Proceeds from the sale would be dedicated to Woodside's extensive suite of development projects on which the company expected to spend about $ 4 bn over the next three-to-five years.
Woodside has pledged to consider up to seven projects for final approval in 2004, which if approved could almost double its production to 100 mm barrels of oil equivalent by 2007.