Woodside buying stake in Leviathan

By wire and staff reports

Australia’s Woodside Petroleum agreed to pay an initial $696 million for a stake in Israel’s largest natural gas field.

Woodside, based in Perth, will acquire a 30 percent interest in the Leviathan field, estimated to contain 17 trillion cubic feet of gas, from partners Noble Energy, based in Houston, Mediterranean, Delek Drilling, Avner Oil Exploration and Ratio Oil Exploration, in a deal announced Sunday night.

“Being selected as the Leviathan joint venture’s preferred partner in a competitive bidding process demonstrates the value of our LNG development capabilities,” Woodside CEO Peter Coleman said in a statement. Woodside will be the operator of any liquefied natural gas development of the field.B

Woodside, seeking to broaden its portfolio of oil and gas assets to meet growth targets, has said it’s studying expansion options in the Eastern Mediterranean, Southeast Asia and the Americas. Noble said in December 2010 that Leviathan was the largest discovery in its history.

Noble is conveying a 9.66 percent working interest and will continue as upstream operator with a 30 percent working interest. The transaction is subject to the negotiations and execution of definitive agreements between the parties.

Charles D. Davidson, Noble’s chairman and CEO, said in a statement: “Noble Energy is extremely pleased to welcome such a substantial and knowledgeable strategic partner as Woodside. We are confident that their extensive experience in LNG projects will further unlock value in the world-class Leviathan resource. The entry of Woodside will bring additional international diversity to the Eastern Mediterranean area, thus highlighting the global importance of the Levant Basin.”

Under the deal, Noble Energy would receive cash payments totaling $464 million. That would include an initial cash payment of $287 million payable — followed by two contingent payments totaling $177 million.

The first contingent payment of $64 million would come once laws permitting the export of liquefied natural gas exports from Israel are in force. The second, for $113 million, would be when a final investment decision is made in relation to an LNG development.

To help ensure that the the first phase of of the Leviathan project gets done in a timely manner, Noble said in a statement, that it has offered “limited temporary financing consideration” to its existing partners in certain situations. Those situations included where the partners have not timely secured adequate funding or are at risk of default due to inability to pay their share of costs; or if total project costs exceed a specified level above the project’s current projected costs.

The Leviathan project is located on the Rachel and Amit licenses offshore Israel in 5,550 feet of water.

Bloomberg News and the Houston Chronicle contributed.