OIL Search is set to close down its Brisbane office and has cut some jobs as part of a restructuring in response to low oil prices, as talk resurfaces that the Papua New Guinea oil and gas player is set to become the target of a takeover approach from Woodside Petroleum.
Functions from the office in Brisbane will be shifted to Sydney and while some of the 60 people employed in Brisbane will also move south, some jobs are being lost, an Oil Search spokeswoman said yesterday.
Some jobs are also being reduced in PNG, while other support functions are being shifted from field operations to the Port Moresby office.
The spokeswoman could not give an overall number for job reductions, pointing out that Oil Search is still recruiting in growth parts of its business.
Managing director Peter Botten, who is believed to be visiting various Oil Search sites in PNG this week to explain the restructuring to staff, said it was “a difficult time” for affected employees, some of whom were “long-term contributors” to Oil Search.
“It is a period of change in Oil Search but it is essential that in the current volatile operating environment we make our business sustainable and one that can continue to grow in PNG,” he said in a statement to employees earlier this week, which referred to “a number of redundancies”.
“We are totally committed to continuing to grow our company in this country and playing our role in building this nation,” Botten said in the statement.
Oil Search advised at its first-half results last month that it would roll out a range of initiatives this December half as part of a “business optimisation programme” that is targeting a 15 to 20 per cent reduction in operating and capital costs starting in 2016. It has earmarked about US$10 million (K27.8 million) to cover restructuring costs this year and said the measures would make the company a much leaner and more efficient organisation.
The Port Moresby-based company, about 10 per cent owned by the PNG Government, is ExxonMobil’s biggest partner in the US$19 billion (K52.8 billion) PNG LNG venture, which started production more than a year ago and has driven a surge in PNG’s earnings.
Speculation that Woodside is preparing an unsolicited approach to Oil Search resurfaced last week and has revived again within the last 24 hours, both in London and Port Moresby.
However, the PNG Government’s stake is seen as a major obstacle to any takeover bid for Oil Search.
Woodside chief executive Peter Coleman has also emphasised the company would be very disciplined on the valuation of any target – which also seems to reduce the likelihood of any bid for Oil Search – that would command a chunky premium to its $10.2 billion market value. – Sydney Morning Herald