Woodside Petroleum has confirmed market expectations that it was looking for a major fund raising, revealing plans yesterday to raise $2.5 billion from shareholders and other investors.
The fund raising could be the first of several over the next few years as big investors said the company didn’t rule out more approaches to the market for new capital.
The money is being sought to finance ambitious plans to expand its presence in the booming global market for liquefied natural gas (LNG).
Woodside will offer one new share for every 12 held at $42.10 a share, a 10.8% discount to its Friday close of $47.18, the company said yesterday.
Trading was halted yesterday before dealings opened to allow the book build to happen.
Woodside’s largest shareholder, Royal Dutch Shell, will take up its full entitlement worth about $862 million.
The issue comes after Woodside raised $1.3 billion via a private bond issue in the US and then sold its Otway basin gas project in Bass Street to Origin Energy and another partner for $713 million.
Woodside said yesterday it aims to approve a second phase of its Pluto LNG project by the end of next year and a third in 2011.
Woodside revealed a possible 10% rise in the cost of Pluto last month to about $13 billion.
Woodside said its expected 2009 full year production is at or about 81 million barrels of oil equivalent (mmboe), subject to the impact of any cyclone activity and the performance of facilities.
"Woodside expects a 2010 production range of 70 to 75 mmboe, following the divestment of its interest in the Otway Gas Project, which remains subject to completion.
"Woodside has also confirmed that the Pluto Train 1 project is 82% complete. The project remains on schedule for first gas in late 2010 and first LNG early 2011.
"The Entitlement Offer will take the form of a fully underwritten accelerated renounceable entitlement offer under which shareholders will be entitled to acquire one new Woodside share for every twelve shares held on the Record Date, at a price of A$42.10 per new share.
"The Entitlement Offer will raise approximately A$2.5 billion. New shares issued under the Entitlement Offer will rank equally with existing shares.
"Renounced entitlements will be sold via the institutional and retail bookbuilds, with any proceeds in excess of the issue price returned to renouncing shareholders," Woodside said yesterday.
Woodside said it expects to announce the outcome of the Institutional Entitlement Offer to the market prior to the commencement of trading on December 17 (Thursday) and will remain in trading halt until this time.
Woodside is transforming itself into a major LNG player and is building the Pluto project off Western Australia as well as LNG projects in the Browse Basin and Timor Sea. They are on top of the North West Shelf which is the biggest LNG project in the country.
Woodside’s 2009 financial year balances on December 31.
In a presentation to investors Woodside said that this year will have been the peak year for Pluto funding "with total capital expenditure requirement for 2010E of around A$3.6 billion".
The company said this would be funded by "Cash and undrawn facilities of A$1.8 billion (as at end Nov. 2009) , cash flow from operations Pluto cash flows available from 2011; asset sales Otway sale price A$712.5 million; capital markets with the A$2.5 billion equity raising".
The Nov 2009 US bond offer was "oversubscribed" and the company said the entitlement offer "will strengthen Woodside’s Balance Sheet".
Woodside said it "anticipates the DRP for FY09 final dividend will not be underwritten".
