Woodside to raise $2.5bn for Scarborough acquisition, LNG expansion

The North West Shelf Project, where Shell and Woodside are partners. Image: Woodside Petroleum

Woodside Petroleum has announced a $2.5 billion equity raising to provide funding to increase its ownership of the Scarborough gas field offshore Western Australia by 50 per cent.

The Perth-based company has secured a sale and purchase agreement to acquire an additional share in the WA-1-R lease, which contains most of Scarborough, from ExxonMobil.

Once Woodside has completed the deal, initially flagged in July last year, it will give the company a 75 per cent interest in WA-1-R, located in the Carnarvon Basin.

Peter Coleman, chief executive officer of Woodside, said the Scarborough acquisition delivered greater alignment, control and certainty for the project.

“Our Burrup Hub concept is advanced by our announcement today of an increased stake in the Scarborough gas field,” Coleman said.

“The development concept involves maximising existing infrastructure at the Pluto LNG plant to meet a market gap we expect will emerge from the early 2020s.”

Woodside also plans to use the proposed funding to support development of Scarborough and the SNE-Phase 1 LNG project, offshore Senegal, as well as for advancing the Browse project towards a final investment decision (FID).

The equity raising will take the form of a renounceable offer where shareholders will be entitled to one new Woodside share for every nine shares held on the record date at a cost of $27 a new share.

Coleman said the offer represented an important part of Woodside’s strategy for shareholder delivery.

“The entitlement offer provides equity funding for Scarborough and SNE-Phase 1, and supports progression of Browse to targeted FID. These projects are a continuation of our previously announced strategy of unlocking the Burrup Hub and developing oil in West Africa,” Coleman said.

Woodside also released its full-year results today, showing increased net profits, reduced injury rates and significant progress on five priority sites: Wheatstone, Pluto LNG and Senegal (Horizon I), and Myanmar and Browse (Horizon II).

The Horizon I sites are currently generating cash and contributed to Woodside’s overall boost of 18 per cent in net profits to $1.03 billion; in shareholder terms, this translated to  98 cents per share, a rise of 15 cents per share over the previous year.

Total recordable injury rates (TRIR) saw an outcome of 1.26, a 21 per cent improvement on last year’s 1.64 score, making this a record low for the company.

Woodside announced that new shares issued under its entitlement offer would rank equal to existing shares but would not be entitled to any 2017 final dividends.

The Horizon II sites are scheduled for development from 2022-2026 and a prospective Horizon III project is scheduled for a 2027 start (to repeat successes, as the company puts it).

Woodside is Australia’s biggest independent oil and gas company, and provides seven per cent of the world’s supply of LNG. With a portfolio across Australia, sub-Saharan Africa and the Asia-Pacific, the company plans to continue concentrating on its current expansion plans into 2018.

“It is a great privilege for me to report once more on an excellent performance by [Woodside],” said outgoing chairman Michael Chaney, who originally joined the company in 1972.

“Predicting oil prices with any reliability is impossible, but Woodside has shown over the years that a low-cost producer can survive and indeed prosper in any conditions.

“Against the backdrop of oil price volatility and, at times in the past decade, global financial stress, [Woodside] was able to maintain profits and pay dividends.”