Australian energy giant Woodside and BHP Billiton have entered into an agreement in relation to the proposed development of the Scarborough gas field off W. Australia. With this agreement, Woodside will become the operator of the development.
Woodside said on Monday that, under the agreement, BHP waived its right of pre-emption and provides its consent to the sale by ExxonMobil to Woodside of its 50% interest in WA-1-R and the Scarborough Joint Venture Operating Agreement.
Woodside entered into a binding sale and purchase agreement (SPA) to acquire ExxonMobil’s share of the Scarborough gas field located in the Carnarvon Basin Australia in February 2018. The completion of the deal was subject to pre-emption rights and customary regulatory approvals.
This will result in Woodside holding a 75% interest in Scarborough. Woodside will become the Scarborough operator on completion of the transaction with ExxonMobil.
Furthermore, Woodside granted BHP an option to purchase an additional 10% interest in Scarborough on equivalent consideration and terms to the transaction with ExxonMobil. The option may be exercised by BHP at any time prior to the earlier of December 31, 2019 and approval to start the front-end engineering and design phase of the Scarborough Development.
In addition, Woodside and BHP will undertake good faith discussions in relation to: the unitization of WA-1-R (which contains the majority of the Scarborough gas field) and the adjacent WA-62-R (in which Woodside and BHP each hold a 50% interest); potential offers to sell up to a 10% interest in Scarborough to foundation LNG buyers on a pro-rata basis; and technical and commercial arrangements for the Scarborough Development.
It is worth reminding that Woodside first bought a stake in the Scarborough area assets from BHP Billiton in 2016.
Woodside CEO Peter Coleman said that this new agreement with BHP strengthened alignment and certainty of the Scarborough Development.
“I am pleased BHP has agreed that Woodside will become operator of the Scarborough Development. The Scarborough joint venture will now be focused on finalizing the development concept prior to entering FEED and positioning for FID in 2020,” he said.
Completion of the transaction between ExxonMobil and Woodside continues to be targeted by end of 1Q 2018.