Woodside Petroleum (ASX:WPL) recently announced an intention to carry out a A$2.5bn capital raising to help fund its acquisition of Exxon’s stake in the Scarborough gas field. Woodside already owns 25% of the gas field, alongside joint venture partners Exxon (50%) and BHP (25%) and as long as BHP does not pre-empt the transaction, it will see Woodside’s interest move to 75% ensuring greater development control.
Under the Entitlement Offer, Woodside is offering eligible shareholders the opportunity to subscribe for 1 new share for every 9 existing shares held on the Record Date (19 February 2018) at an offer price of A$27 per new share. On 14 February 2018, eligible institutional shareholders were given the opportunity to take up all or part of their entitlement under the institutional entitlement offer at a similar offer price of A$27 per new share. The retail entitlement offer opens on 21 February 2018 and is expected to close on 7 March 2018. These rights commenced trading on the ASX as at 21 February 2018 and will remain in trading until 28 February 2018, allowing those who elect not to subscribe to the new right the option to sell them on market and avoid the potential modest dilution.
Our independent third-party research provider Morningstar remains constructive on WPL as Australia’s premier dedicated oil and gas player and as such, have recommended that shareholders take up the offer given that the issue price of $27 sits at a 30% discount to Morningstar’s assigned fair value of $40 and a further 10.30% discount to the dividend adjusted theoretical ex-rights price.
If you have any further queries in relation to the offer and wish to discuss any matters in relation to your holding, please feel free to contact a member of our Wealth Management team on 03 9810 0700.