Subject: SMH: BHP to sell out of Timor project
Date: Sat, 27 Mar 1999 09:20:57 -0500
From: "John M. Miller" <>

Received from Joyo:

Sydney Morning Herald 25/03/99

BHP to sell out of Timor project


BHP Petroleum's no-show at a meeting of the partners in the Bayu-Undan project in the Timor Sea, held in Jakarta on Tuesday, indicates it is on the verge of exiting the gas/condensate field.

While BHP has never said so publicly, it has been trying to sell out of the 23.4 per cent interest for some time.

Earlier this year BHP offered the stake to select parties through a closed tender process. This was concluded on Friday, prompting speculation that Oklahoma-based Phillips Petroleum was the buyer.

That would be a turnaround from 11 months ago, when BHP initially put the stake up for sale only to reject Phillips Petroleum's ensuing offer.

Phillips, which already owns 26.9 per cent of Bayu-Undan, has pre-emptive rights over BHP's stake as do the other joint venture partners, Santos and Petroz.

A BHP spokesman said: "As you are aware, we have a very active asset-review program under way at the moment." But he would not comment on the speculation.

Since the deliberations on Bayu-Undan began, oil prices have fallen below $US11 a barrel. But moves by the Organisation of Petroleum Exporting Countries to cut production have been a fillip: the three-month price for West Texas crude last traded at $US15.66 a barrel.

Despite the downturn in sentiment across the oil sector, stockbroking analysts estimate BHP can reap at least $200 million.

The proceeds will help offset its drastically crimped cash flows because of low commodity prices. BHP is expected to report a third-quarter profit before abnormals of less than $50 million tomorrow.

Nevertheless, BHP shares are on the rise. They have jumped from an $11.70 low to yesterday's four-month high of $13.46, rising 40c on the day.

BHP's exit would end a difficult partnership with Phillips. The pair have been at loggerheads over how to develop the asset.

BHP's preference was for a high-tech offshore liquefied natural gas plant, costing $1.6 billion for the second phase.

The first stage is estimated to involve a capital investment of $1.9 billion to $2.4 billion that would produce about 60,000 barrels of condensate and 40,000 of liquid petroleum gas a year.

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