* Decision on Leviathan seen in first half 2014
* Long-term LNG contracts review to boost prices, earnings
* Woodside currently marketing Browse LNG in Japan
* Plans to sell U.S. Gulf of Mexico assets
(Adds analyst comment on LNG contract negotiations)
PERTH, Dec 10 Woodside Petroleum Ltd
said it expects to make a final decision on an investment in
Israel's Leviathan field in the first half of 2014, around the
time that Israel is likely to finalise its tax policy for gas
Woodside has made an in-principle agreement to buy a 30
percent stake in the newly discovered gas prospect for $1.25
billion, part of a strategy to diversify outside of Australia
that has seen it also eye projects in Myanmar and Ireland.
In October, Israel's top court upheld a government decision
to allow about 40 percent of natural gas from the country's
offshore reserves to be exported, dismissing arguments that more
gas should be earmarked for domestic use.
Israel's finalisation of its tax policy for gas exports,
which the company expects within the next 60 days, will add
additional regulatory certainty for the project, Woodside chief
executive Peter Coleman said.
But he said the company is still working to make sure the
commercial case for Leviathan is solid.
"First and foremost we are focused on ensuring that we have
a commercial outcome that delivers value to us," Coleman told
analysts and reporters in an investor briefing on Tuesday.
Woodside cut its investment expenditure for 2013 to $1.1
billion from $2.3 billion, mostly due to the deferral of
spending on Leviathan. It put investment expenditure in 2014 at
$2 billion to $2.4 billion.
With the bulk of its long-term LNG contracts under price
review, Woodside said it expects the prices it receives for LNG
to move toward the Japanese average of around $15 per million
British thermal unit (mmBtu). Some of its lowest priced
contracts are around $8 per mmBtu, according to analysts.
A jump in prices for some contracts could boost earnings
before interest, tax, depreciation and amortisation (EBITDA) and
before exploration by more than a $1 billion when the changes
kick in, said Citigroup analyst Mark Greenwood.
Other analysts declined to put a dollar figure on potential
increases from the price reviews as renegotiations are ongoing,
but agreed they would be significant.
"It will be a material increase in price realisation for
Woodside at the corporate level," said David Hewitt, an analyst
with Credit Suisse.
Woodside, which reported EBITDA before exploration of $5.4
billion in 2012, said it could not comment on any expected
Woodside, the operator of the giant North West Shelf
project, is firming up plans for the Browse liquefied natural
gas (LNG) project.
Coleman said Woodside was in the early stages of marketing
LNG from Browse to customers in Japan, along with joint venture
partners Mitsui & Co and Mitsubishi Corp.
Woodside plans to begin front end engineering and design
work in mid-2014 and make a final investment decision on the
project in the second half of 2015.
Woodside said it is also looking to sell some small assets
in the U.S. Gulf of Mexico after selling a 20 percent stake in
the Anadarko-operated Power Play field in the Gulf
earlier this year.
"We don't have the critical mass there to have a long-term
sustaining business... if we can get full value for the assets,
then we will make an orderly exit," Coleman said, adding it
would provide details on pending transactions early next year.
Woodside narrowed its 2013 production target to 86 to 88
million barrels of oil equivalent (mmboe) from 85 to 89 mmboe
previously, and said it was targeting production of 86 to 93
mmboe for 2014.
(Reporting by Rebekah Kebede; Editing by Richard Pullin)