Woodside prepared to be patient on Leviathan

CEO Peter Coleman: Leviathan is a world-class asset and a significant value-creating opportunity.

Woodside Petroleum Ltd. (ASX: WPL) CEO Peter Coleman told the Australian media yesterday that the company was prepared to be patient, and that it would wait for the Israeli High Court of Justice to rule on the issue of natural gas exports from Leviathan. "We hope to receive further clarity around this policy through a high court decision in the second half of this year," he said.

"Leviathan is a world-class asset and a significant value-creating opportunity for Woodside so we're prepared to be patient and will work through any outstanding issues with the Leviathan joint venture to finalize this deal," he added.

In December 2012, Woodside signed an agreement to acquire 30% of the rights to the Leviathan gas field for $1.25 billion from Noble Energy Inc. (NYSE: NBL), Delek Group Ltd. (TASE: DLEKG), and Ratio Oil Exploration (1992) LP (TASE:RATI.L). The deal was supposed to be closed in February, but has been postponed because of the government's delay in deciding on gas exports and how much of the gas reserves to keep for domestic use. Under the memorandum of understanding, Woodside was due to make a down payment of $696 million when the agreement was signed, but the payment has been frozen until a final decision in made on gas exports.

"It was pleasing to receive notice during the half that the government of Israel has maintained its domestic gas reservation for Leviathan at 50%, despite an aggregate increase in reservation volumes for all fields to 60% This delivers on the original policy setting for Leviathan on which Woodside based its investment," Coleman said. In June, the government approved gas exports, but increased the gas to kept for domestic use to 60% of total reserves, and allowed the export of 40%.

Leviathan's well operator, Noble Energy, plans commercial production from the field to the Israeli market by 2016, and there has been talk about building a liquefied natural gas (LNG) plant or exporting gas via a pipeline.

Published by Globes [online], Israel business news - - on August 22, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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