SYDNEY: Papua New Guinea-based Oil Search announced on Monday it had rejected a takeover bid from Australian energy giant Woodside Petroleum estimated at Aus$11.6 billion ($8.1 billion) saying it “grossly undervalues” the company.
In a move to tap into the Papua New Guinea market, Woodside had offered one of its shares for every four Oil Search shares.
“The board has concluded that the proposal is highly opportunistic and grossly undervalues the company,” Oil Search said in a statement to the Australian stock exchange ASX.
Oil Search pointed to its share in the massive $19 billion PNG liquefied natural gas project—the largest development ever undertaken in the Pacific island nation.
The company said it was well-placed to capitalize from a recovery in the price of oil, which has roughly halved in a year.
“Oil Search is in a very robust financial position, with strong operating cash flows from its producing assets, even at current low oil prices, and current liquidity of US$1.6 billion, comprising $850 million in cash and $750 million in undrawn corporate credit facilities,” the statement said.
Woodside last month reported a 39 percent drop in net profit to $679 million in the six months to June 30, saying the decline was due to falling commodity prices.