Woodside chief executive officer Don Voelte said the agreement would consolidate Woodside’s ownership in one of its key assets.

“We are keen to make further investments to increase production from the project as well as to pursue further opportunities in the area,” Voelte said.

“We supported the entry of Paladin into the joint venture because they shared our view of the investment opportunities in and around Laminaria-Corallina. We are each increasing our interests and are committed to working together to realise the full potential of these assets.”

Woodside already plans to drill an infill appraisal well in the Laminaria field in the second quarter of 2005 and an exploration well in the AC/P8 permit later in the year.

Woodside has long wanted to undertake further development of these fields, but has been held back by unenthusiastic partners.

In January Paladin completed a $150m acquisition of BHP Billiton's interests in the Laminaria and Corallina fields and the Northern Endeavour FPSO

The fields are about 550km west-north-west of Darwin in water depths of between 350 and 400 metres.

Shell Development (Australia) currently has a 22.5% stake in Laminaria-Corallina. Under the agreement, Woodside will buy from Shell an additional 16.67% interest in production licence AC/L5, which covers most of the Laminaria-Corallina project, while Paladin will purchase Shell’s remaining interests in AC/L5 and its 15% interest in the adjacent exploration permit AC/P8.

Following the purchase, Woodside will own 66.67% of the Corallina field and the Northern Endeavour floating production storage and offloading vessel as well as a 59.9% interest in the Laminaria field, which is unitised over production licences AC/L5 and WA-18-L.

Paladin will hold the remaining 33.3% of both the Corallina field and Northern Endeavour and the remaining 41.1% of the unitised Laminaria field.

The transaction has an effective date of 1 July 2004 and is expected to close by April 2005.

The purchase price of US$93.3 million will be reduced after adjustments for working capital and cash flow movements between the effective date and closing. The transaction is subject to approval by Australian regulatory authorities.