Another Aussie oil blog comment

some further thoughts on pre-emotion from Aussie blog. Food for thought.

"Our current favourite soap opera in the oil patch - the pre-emptive rights held over Conoco's sale of its offshore Senegal assets to Woodside Petroleum (WPL) - is the topic that keeps on giving for this blog.

The latest twist was what can only characterise as the bizarre following recent media comments from WPL's CEO, Peter Coleman:

“FAR’s notice was surprising to us because one, they didn’t pre-empt; two, the asset is a company, you can’t pre-empt companies; and three, they’d need to demonstrate their financial and technical capability. So there’re some big hurdles for them to get over.”

Taking each point:

1. FAR agrees it has not pre-empted - it has stated it has yet to receive a valid notice upon which it could pre-empt.
2. This is the big one - pretty much all modern JOAs have pre-emption clauses that deal with subsidiary corporate as well as asset transactions.  We cannot understand why Coleman would make a statement to the contrary.
3. No Court would in our view find that an existing JV party in good standing exercising its pre-emptive right would fall afoul of the normal third party tests of financial/technical competence and we can think of no precedence being even close to this.

We can only conclude that Coleman is under some pressure to deliver this deal - particularly given WPL's poor deal-making record in recent years (exemplified by its takeover approach to Oil Search which was almost contemptuously brushed off).  Why else would be talk what frankly looks like a load of rubbish?"