Under terms of the deal, Woodside has joined US-based Pioneer Natural Resources in a 50:50 partnership covering 47 exploration blocks in an area of the Gulf of Mexico that can be readily commericialised. The agreement includes five wells this year and three in 2004.

While some in market like the deal as a good short term measure to plug an expected earnings gap between now and 2005, others remain sceptical and the stock is now trading at $11.50, a three year low.

Not helping Woodside's cause has been tough market conditions, a strong Australian dollar and expectations that once the war with Iraq is over and the turmoil in Venezuela subsides, the price of oil will head south real quick, especially if swing producer Saudi Arabia ramps up production.

Nevertheless, Deutsche Bank energy analyst John Hirjee says despite the negative market sentiment toward Woodside at the moment, he remains positive and has recommended a "buy" for the Perth-based energy giant.

Hirjee likes the move into Gulf of Mexico's shallow waters as its complement Woodside deep-water plays in a province regarded by many as the most exciting outside the Middle East.