Woodside Petroleum Pulls Out Of Deal To Acquire 25% Stake In Leviathan Project

(RTTNews) - Australian oil and gas producer Woodside Petroleum Ltd (WOPEF, WOPEY, WPL.AX) announced Wednesday that it has decided to terminate the non-binding memorandum of understanding with Leviathan joint-venture participants that was agreed up on in February 2014 for acquiring a 25 percent stake in the joint venture.

Woodside noted that negotiations on the deal with the joint-venture participants failed to reach a commercially acceptable agreement to execute the acquisition.

Woodside CEO Peter Coleman said that this was a difficult decision and one that was not taken lightly. He added, "All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal."

The MOU provided a framework to negotiate in good faith, the acquisition of a 25 percent participating interest in each of the 349/Rachel and 350/Amit petroleum licenses located offshore in Israeli waters for about $2.5 billion.

Woodside had initially in late 2012 agreed to take a 30 percent stake in the field, but had to climb down after the field size was in February 2014 estimated higher than the previous projection.

The Leviathan Project is located offshore Israel in about 5,550 feet of water. It has an estimated 19 trillion cubic feet of discovered natural gas resources. The sanction for the initial phase of development at Leviathan is targeted by the end of 2014, with first production from the field currently planned for late 2017.

The termination will see Noble Energy, Inc. (NBL) continuing to be the operator of the Leviathan Project with a 39.66 percent working interests. Meanwhile, Delek Drilling (DKDRF) will continue to hold a 22.67 percent, Avner Oil Exploration LP (AVOGF) a 22.67 percent, and Ratio Oil Exploration LP (RTEXF) a 15 percent working interest in the joint venture.

NBL closed Tuesday's regular trading session at $69.34, down $0.22 or 0.32% on a volume of 0.94 million shares.