The 74,914,500 shares were sold through an institutional book build at a price of $0.83 per share with Woodside taking advantage of a recovery in Oil Search shares, which have risen by about 50% since mid-April.

The sale comes as Oil Search received a boost to its PNG gas pipeline plans by signing a conditional deal with Energex and Comalco to purchase substantial volumes of gas.

The supply covers a period of 20 years from 2007, with total quantities to be between 480 and 1200 petajoules over that period. While the quantity is well short of the demand needed to make the pipeline viable, Oil Search would be buoyed by signing the highly contested and lucrative Comalco contract.

To be economically viable the pipeline needs at least 100PJ of gas demand a year, from its first year of operation.

The minimum case at present, given the four firm customers, is only 83PJ a year, although if Energex took its maximum demand of 1200PJ a year over 20 years from year one, the project could be viable.

Woodside first emerged as a key Oil Search shareholder when it took a $118 million placement of shares at $2.10 each to take a 12% stake and a board seat in 1999. The company was able to make a profit on the share sale after previously writing down the value of its stake from $2.04 to 80c a share.

At the time the move into Oil Search was seen as an endorsement of the PNG pipeline project but since then the development of the Tangguh, Bayu-Undan and Blacktip gas fields has congested the LNG market leaving the $6 billion venture up in the air.