More news from the growing gas sector with Woodside Petroleum confirming that it was well on track to raise the $2.5 billion it announced it was seeking earlier in the week.
The company told the market yesterday that it had received “overwhelming support” for the institutional portion of the issue.
This part of the transaction will raise about $1.7 billion, with 93% of stockholders taking up their entitlements, Woodside said in a statement to the ASX.
Investors were able to buy one new share for every 12 they own at $42.10 each, compared to the last sale before the announcement of $47.18.
Despite some reports of shareholder unhappiness with the issue, the 93% success rate is a solid outcome and could explain why Woodside’s shares basically withstood the usual selling pressure after being relisted yesterday.
The shares lost just over 1%, or 48 cents to close at $46.70.
That gives those shareholders who took up the issue an immediate profit of around 9%, or $4.59 a share.
That strength was why Woodside was able to sell 3.2 million shares not taken under the institutional offer at $45 each yesterday.
Woodside plans to use the proceeds on the issue to help fund the $13 billion Pluto LNG project in northern WA.
Royal Dutch Shell, the company’s largest shareholder, will invest $862 million to maintain its 34.3% stake.
The retail component of the offer, expected to raise about $800 million, opens on Monday, December 21 and is expected to close around January 29.
Woodside Chief Executive Officer Don Voelte said in the statement "the success of the institutional component of the equity raising demonstrated strong support for the company’s LNG growth portfolio, which includes an expansion of Pluto and the Browse and Sunrise developments."
The shares taken up under the Institutional Entitlement Offer and the institutional bookbuild are expected to be issued on December 24, and commence trading on the ASX on the same day. (Merry Christmas).
Meanwhile Chevron has revealed that it had signed a "binding, 25-year sales agreement" with Japanese group, Chubu Electric Power Co. for annual supplies of 1.44 million tonnes of liquefied natural gas from the $43 billion Gorgon project in Western Australia.
Chubu will take a 0.417% stake in Gorgon, leaving venture operator Chevron with about 47%, the US company said in a statement yesterday.
"We are pleased to build on our long-term relationship with Chubu Electric and welcome them as a foundation customer and equity participant in the Gorgon Project," according to a statement quoting Jim Blackwell, president, Chevron Asia Pacific Exploration and Production Company.
"The SPA with Chubu Electric continues to build momentum toward commercializing our equity natural gas in the project."
The agreement follows the recent signing of three binding long-term contracts with Osaka Gas, Tokyo Gas and GS Caltex, a 50%-owned Chevron equity affiliate, for delivery of a total of nearly 3 million tonnes a year of Gorgon LNG, as well as a Heads of Agreement with the Korea Gas Corporation (KOGAS) for a further 1.5 million tonnes a year.
Assuming all these deals are done, Chevron could have less than a million tonnes a year of LNG a year to sell from its share of Gorgon, which will produce around 15 million tonnes a year from around 2020.
"The foundation customers in Gorgon are leading energy companies in the world’s largest LNG markets. Our agreements position Chevron to deliver supplies to meet long-term demand in the growing Asia-Pacific region," said John Gass, president, Chevron Global Gas.
The first stage of Gorgon will include a three-train, 15 million-tonnes a-year liquefied natural gas facility and a domestic gas plant.
Last week Chevron signed heads of agreement with Tokyo Electric Power for half of the Wheatstone project’s output for $90 billion.
Earlier this week, Chevron came back with confirmation of a major discovery of its own near the Gorgon project.
Chevron said it was too early to say how much gas is located at the Satyr-1 exploration well at the WA-374-P permit area. But it suggested the so far were encouraging and there were hints dropped the discovery could extend the life of the giant Gorgon project, even before the first gas is produced.
The Gorgon LNG project at Barrow Island about 130 kilometres off Western Australia’s north west coast, is Australia’s largest resources project.
It has an estimated 40 trillion cubic feet of gas at its various fields and will be operating for at least 40 years.
The Satyr-1 well is located northeast of Barrow Island, east of the Gorgon field.
