Australian oil and gas company Santos has raised more than $1 billion through a share placement to institutional investors in the first part of a $1.5 billion capital raising it announced earlier this week.
Santos outlined plans on Wednesday to raise $1.04 billion via institutional investors, and a further $500 million through a non-underwritten issue to retail investors in the coming weeks.
According to Santos, the capital raising would remove ‘potential uncertainty’ around the company’s ability to build and grow a sustainable business in a low oil price environment.
The completed institutional placement was valued at $4.06 a share, a 7.9 per cent discount on the company’s last closing price.
Santos managing director Kevin Gallagher said the equity raising was significantly over-subscribed with strong demand from existing shareholders and new investors.
“Santos is now positioned to deliver a low cost, reliable and high performance business with financial flexibility to build and grow the business in a low oil price environment,” Gallagher said.
The company plans to use the funds to strengthen its balance sheet and for financial flexibility to take advantage of growth opportunities aligned to its core business and recently announced strategic plan.
Santos launched a new company strategy last week that will see the company focus on its key assets and spin-off its non-core business.
The company is targeting a US$1.5 billion ($2 billion) reduction in debt by the end of 2019 by increasing cash flow and offloading the non-core assets and infrastructure.