The sales process for Chevron’s $5.8bn stake in the North West Shelf project in Western Australia could soon get interesting with talk in the market that competition favourite Woodside Petroleum is out of the running.

DataRoom understands that Woodside has not gone forward into the second round of the competition, which is said to be getting under way this week.

However, given it has pre-emptive rights over the stake, some suspect it could return to the contest in the final hour.

That creates questions as to what parties formally remain in the running.

Late last year Canada Pension Plan Investment Board was said to be taking a look, along with GIP. Brookfield had discussed a joint bid with Woodside but it is understood it opted not to compete for the stake.

It all comes as the drums beat louder that an equity raising is looming for Woodside. This would create cash reserves should an acquisition be on its agenda at a later stage.

Working on the sales process of the 16.67 per cent stake is investment bank UBS, which is understood to have taken first-round bids from suitors last year.

It is worth remembering that only months ago, Chevron’s rival (and as it now seems, potential merger target) ExxonMobil called off its plans to sell its 50 per cent interest in the Bass Strait gasfields off the coast of Victoria, with not enough interest in the multibillion-dollar asset at the price level that made it a willing seller.

Last year, outgoing Woodside boss Peter Coleman indicated Woodside was interested in the stake. However, market experts say Woodside would not want to overpay for the asset at a time when the oil price is depressed.

Another stumbling block is that Woodside still has not announced a replacement for Mr Coleman, who is set to depart this year. But market experts say while this would make a deal harder, it would not stop the company embarking on an acquisition.

Woodside, advised by Gresham, had always been seen as the strongest contender to buy the 16.67 per cent interest in North West Shelf given that it operates the asset and also owns a stake that is the same size.

The challenge for an infrastructure buyer has been the uncertainty about reserves yet to be locked in beyond 10 years and the fact that the asset class is less familiar than their usual targets.

One dark horse in the process may be Macquarie Group, given its history with owning the Quadrant Energy business in Western Australia with Brookfield.

Quadrant Energy was sold to Santos in 2019 for $US2.15bn.

Prospective North West Shelf buyers were earlier told they had three options when making an acquisition proposal: acquiring the entire 16.67 per cent; taking the interest with an agreement that Chevron underwrites the revenue for a certain period; or buying only the revenue stream from the asset while sidestepping any asset abandonment liabilities or other risks.

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