Woodside raises $2.5 billion

WOODSIDE Petroleum is raising $2.5 billion to acquire an additional stake in WA’S Scarborough gas field and progress the development of its Browse LNG project to a final investment decision (FID). Woodside will acquire Exxonmobil’s 50 per cent stake in Scarborough for an initial $US444 million, plus an additional payment of $US300M upon an FID to develop the field. This will give Woodside a 75 per cent controlling stake in the project after it bought out BHP’S share in 2016. The capital raise will also provide funding for a second production unit at its Pluto LNG plant and first-stage development of the SNE discovery off the coast of Senegal. Woodside chief executive Peter Coleman said these projects were a continuation of the company’s previously announced strategy of unlocking the Burrup Hub and developing oil in West Africa. “The acquisition of the additional interest in Scarborough provides greater alignment, control and certainty over a low-cost, high value opportunity ahead of a global LNG supply gap,” Mr Coleman said. “It will allow us to develop new supply that we expect to be materially value accretive.” “There is great expected LNG market demand growth and now we have a project that we're confident will go to FID in 2020, and can be built at a lower point in the investment cycle and which can produce in 2025 to deliver value to Woodside and its shareholders.” Royal Bank of Canada (RBC) analyst Ben Wilson said the equity raising of $2.5bn appeared to be designed to head off future possible equity overhang to fund SNE in Senegal, Browse FEED to FID, and Scarborough FEED to FID. “The Scarborough play is clearly designed to leverage brownfield synergies through Woodside’s 90 per cent interest in Pluto and 17 per cent interest in the North West Shelf,” Mr Wilson said. “We have not attributed value for Scarborough post the BHP acquisition, as it broadly has the four less desirable “D’s” of gas: deep, distant, dirty, and dry. “The field is about 400km from the onshore Pluto/nws and about 250km to the offshore Pluto platform. “We are, however, with Woodside in the robust outlook for the LNG market driven by China and India.”

“There is great expected LNG market demand growth and now we have a project that we're confident will go to FID in 2020.”

Image: Woodside. Part of the capital raise will go toward Woodside’s Pluto LNG plant.