West Australia premier says "hands-off" Woodside as shares rally

PERTH/SYDNEY (Reuters) – The premier of Western Australia state spoke out on Monday against any takeover of the nation’s biggest oil and gas firm, Woodside Petroleum (WPL.AX: Quote, Profile, Research), amid reports that Anglo-Australian miner BHP Billiton (BHP.AX: Quote, Profile, Research) was looking at a takeover.

“Hands-off Woodside,” Premier Colin Barnett bluntly told an energy conference in Perth, adding that the industry would lose out if Woodside was taken over though he did not elaborate.

His comments came as Woodside shares rallied more than 7 percent on fresh media reports that BHP (BLT.L: Quote, Profile, Research) was in talks with Royal Dutch Shell (RDSa.L: Quote, Profile, Research) on buying its 24.3 percent stake in Woodside ahead of a potential takeover.

“I don’t care what happens with the 24 percent particularly, but I would just urge you ‘hands off Woodside’ – not a good move for your industry. There are more important things to do: develop new fields, find gas, find oil, find customers, just keep your hands off Woodside,” Barnett added.

There were mixed signals about BHP’s intentions with Shell’s Australian boss saying there were no commercial discussions underway, while banking sources pointed out that the two parties were in regular talks and any deal could be some way off.

London’s The Sunday Times and The Australian Financial Review both said BHP was pursuing the stake, without citing sources.

The reports further fueled speculation of a deal which surfaced last November when Shell sold a third of its stake in Woodside, and gained further momentum in recent weeks.

Woodside shares were up 7.2 percent at A$50.65 at 0058 GMT after touching a 15-month high of A$50.85. BHP was up 1.2 percent at A$48.33.

However, investors pointed out the further Woodside shares rose the more unlikely it was to receive a bid.

“It would be pretty expensive at current prices,” said Jason Teh, fund manager at Investors Mutual, which owns shares in BHP.

“I would like to see how BHP could prove how much value this adds to the business. Obviously it adds to the business, but how much value can it create, in terms of boosting its shareholder return?”

BHP’s credit-default swaps widened 5 basis points to trade as high as 76.6 points on Monday, while Woodside was 5 basis points tighter at 100 points, according to RBS.

The Sunday Times said BHP was talking to Shell about acquiring its Woodside shares in return for some of BHP’s assets, and said UBS was advising Shell.

However, Shell Australia country chief Ann Pickard was quoted by local newspapers on Monday as saying the there were no “commercial” discussions on its 24 percent stake in Woodside and said there was no hurry to do a deal.

The newspaper also pointed to speculation Shell is considering the sale of its stake to Japanese trading houses Mitsui (8031.T: Quote, Profile, Research) and Mitsubishi (8058.T: Quote, Profile, Research) as a potential alternative transaction.

BHP declined to comment on the reports on Monday.

(Reporting by Michael Smith in SYDNEY and Rebekah Kebede in PERTH; Additional reporting by Miranda Maxwell; Editing by Mark Bendeich)

West Australia premier says "hands-off" Woodside as shares rally