PORT MOSEBY, Papua New Guinea, Sept. 14 (UPI) -- Liquefied natural gas company Oil Search said it rejected an acquisition proposal from rival Woodside Petroleum, citing a need to ensure shareholder value.
Woodside last week made an $8.1 billion offer to take on all of the shares in Oil Search, which holds a significant stake in LNG facilities in Papua New Guinea.
Woodside is Australia's largest oil and gas company, serving as the operator of the giant Pluto liquefied natural gas project in the country. Papua New Guinea, meanwhile, is positioned as a key energy hub, helping to meet Asia-Pacific demands for LNG.
Oil Search said its board unanimously rejected Woodside's offer because it grossly undervalued the company and the deal would have diluted current growth opportunities.
"The board of Oil Search believes our company is in a very strong position, both operationally and financially," Chairman Rick Lee said in a statement. "Our focus is on continuing to build and create shareholder value through the company's strong future growth prospects."
Woodside would have benefited from acquired stakes in an LNG facility in Papua New Guinea held by Oil Search. The Australian energy company said it was "surprised and disappointed" by the rejection of its proposal without first meeting with Woodside representatives to negotiate on the terms.
"Woodside believes the proposal would create the regional oil and gas champion for both Papua New Guinea and Australia with a global portfolio of world class assets and development opportunities which would deliver significant benefits to both companies' shareholders," it said.
Woodside made no indication it would improve the terms of the deal. Oil Search said it would consider offers that reflect "compelling value" for shareholders.