Oil Search rejected an all stock takeover bid from Woodside Petroleum slated to be worth about $8 billion.
Oil Search, an oil and gas exploration and development company focused on Papua New Guinea, said its board unanimously decided to reject Woodside’s non-binding proposal.
Last week, Australia-based Woodside had offered one share for every four shares of Oil Search, equivalent to a 14 percent premium over Oil Search’s Monday closing price.
“Following a detailed evaluation of the proposal, the board has concluded that the proposal is highly opportunistic and grossly undervalues the company,” Oil Search said.
Oil Search added that the “overwhelming feedback” from its shareholders has been that the proposal “has little merit.”
Woodside said it is “surprised and disappointed that the board of Oil Search has rejected the proposal without meeting with Woodside to understand the benefits of the opportunity or to negotiate the terms of a possible merger.”
Oil Search added that despite low oil prices it has a current liquidity of US$1.6 billion, with $850 million in cash and $750 million in undrawn corporate credit facilities.
The company holds a 29 percent stake in the PNG Liquefied Natural Gas Project.
Oil Search produced 19.27 million barrels of oil equivalent in 2014 and has proved plus probable plus best estimate of contingent oil resources of 173.6 million barrels and 5.811.6 trillion cubic feet of gas.