Woodside Petroleum chief executive Peter Coleman will hold talks with the Papua New Guinean government to consider whether to sweeten a $11.6 billion bid rejected by Oil Search for grossly undervaluing the company.

Lee did, however, leave the door ajar by pointing out that if any proposals are tabled in the future that reflect compelling value for Oil Search shareholders, the board will engage on them.

Woodside wasn’t talking on Monday, but said in a statement it was surprised and disappointed the offer was rejected although there was little doubt in the market Oil Search would knock it back. The proposal is aligned with Woodside’s strategy of developing superior shareholder returns by maximising the value of our core assets, leveraging our capabilities and growing our portfolio.

Board has unanimously decided to reject Woodside’s non-binding conditional indicative proposal, to acquire all the shares in Oil Search. The deal accounted for 14% premium, as the offer was made before Share Oil stock closed on Monday.

Oil Search owns 29 per cent of the PNG LNG Project which is operated by energy giants Exxon Mobil and Total. “The proposal would significantly alter the fundamental characteristic of an investment in the company and dilute the present growth profile available to its shareholders”, it said. While its share price was hammered as oil prices fell, it has quality assets, a strong balance sheet and growth prospects. A meeting between the two companies, scheduled for Sunday, was called off at Oil Search’s request, according to an earlier announcement from Woodside.

Share prices of Oil Search and Woodside have plunged by more than 30% over the a year ago, while Woodside’s production has stalled.

Oil Search gave Woodside the cold shoulder a second time on Sunday when a meeting scheduled between Botten, Oil Search chairman Rick Lee, and Woodside chairman Michael Chaney was cancelled.

However, it remains unclear if Woodside will return with a higher offer or a change in the structure to potentially include a cash component to sweeten Oil Search investors. Woodside would only say that it will continue to maintain a disciplined approach in relation to business development opportunities.

The group said it also had substantial corporate debt capacity.

The company has material equity in the PNG LNG project and in LNG growth opportunities, including the expansion of the PNG LNG project through debottlenecking, the construction of a third LNG train and the development of the proposed Papua LNG project. Revenue for existing projects is also falling, as most LNG plants sell supplies to Asian buyers at prices linked to oil, which has plunged about 50 percent in the a year ago.