Woodside Petroleum Ltd., Perth, has announced a $2.5-billion (Aus.) equity raising to pay for a number of LNG expansions onshore and offshore Western Australia, including the acquisition of ExxonMobil Corp.’s 50% interest in offshore retention lease WA-1-R containing the bulk of the yet-to-be-developed Scarborough natural gas field on the Exmouth Plateau.
The fully underwritten share sale also will cover work for a second LNG production train at the company’s Pluto plant near Karratha on the Burrup Peninsula, fund Woodside’s share of the new oil development at SNE field offshore Senegal, plus early work on Woodside’s plan to pipe gas from the offshore Browse basin gas fields—Torosa, Brecknock, and Calliance—to the North West Shelf JV’s LNG complex also on the Burrup.
The entitlement offer, underwritten by UBS and Morgan Stanley, involves one new Woodside share at a price of $27/share for every nine shares held. This represents a 13% discount to Woodside’s closing price on Feb. 13 of $31.08/share.
Woodside Chief Executive Peter Coleman made the announcements during the company’s full year 2017 results briefing Feb. 14.
He said the Scarborough acquisition will cost as much as $744 million, comprising $444 million initial payment and a further $300 million once a final investment decision on development has been made. The deal will take Woodside’s interest in WA-1-R to 75%, provided there is no preemption from BHP Billiton. Woodside bought its first 25% of the retention lease from BHPB in September 2016 for $400 million and BHPB still retains the remaining 25% interest.
Woodside’s 2016 purchase from BHP also included 50% interest and operatorship in surrounding leases WA-61-R (containing the Jupiter field), WA-62-R (containing the northern tip of Scarborough field) and WA-63-R (containing the Thebe field).
Thus this week’s deal with ExxonMobil, which should be completed by the end of March, will mean that Woodside gains control of the Scarborough, Thebes, and Jupiter fields, enabling it establish a low-cost development by piping Scarborough region gas to an expansion of the company’s Pluto LNG processing facilities on the Burrup Peninsula. Further upside will come with an onshore interconnect pipeline to be built between the Pluto plant and the nearby North West Shelf JV’s Karratha plant.
Coleman estimated the cost of Scarborough development, comprising offshore field facilities and pipeline to shore plus a second LNG train at Pluto, at about $9.7 billion. Woodside’s share would potentially be about $7.9 billion. A final investment decision is targeted for 2020 with an on-stream date of 2025.
Scarborough has 2C contingent resources of 7.3 tcf of dry gas. Adding Thebe and Jupiter brings the total 2C resources to 8.7 tcf. Water depth at the fields is 900-1,200 m. The fields lie 220-250 km northwest of Exmouth on the Western Australia coast.
Scarborough was discovered by the Esso-BHP Petroleum JV in 1979. Jupiter field was discovered by Phillips Petroleum about 50 km northeast of Scarborough also in 1979, while BHP Billiton found the smaller Thebe field in 1,173 m of water 50 km north of Scarborough in 2007.
