Ann: Woodside agrees to acquire half of BHPB's Scarborough assets,BHP-WPL.AX, page-21

Picked this up from The Australian on the weekend.

"Woodside agreed to pay up to $US400 million for half of BHP’s 50 per cent stake in Scarborough, where operator Exxon has shown no enthusiasm for a North West Shelf development. The price represents about one-fifth the cost, based on resources, that Chinese and Japanese paid to enter the Browse LNG venture in 2012 and one quarter of the cost that Origin Energy paid Karoon Gas Australia in 2014 to enter the Poseidon joint venture, another Darwin backfill contender, in the Browse Basin. Both those projects now look like less likely developments, at least in the near term, than Scarborough."

"Citi estimates a $US4.90 per million British thermal unit break-even cost for the Scarborough development. This is about where current depressed spot LNG prices now sit amid the current oversupply, but is well below Citi’s long-term estimate of $US9"

“We think Scarborough and the North West Shelf almost need each other.”

What interested me was the price that WPL paid, when compared to other transactions. This is certainly a "straw hats in winter" purchase, and seems a great transaction from WPL holders point of view. From BHP holders point of view, if it does go to the NWS, then BHP gets the toll processing benefit as well as the gas sale, so it is still a win/win for both companies.

HT1