Woodside Crafts New LNG Expansion Plan After Striking Exxon Deal
Raising capital at the current point in the oil cycle “is a bold move and somewhat premature in our view,” Neil Beveridge, a senior analyst at Sanford C. Bernstein & Co. in Hong Kong, said in an email. “While the stock will react negatively to this announcement, there is method in the madness if you believe in LNG market growth.”
Woodside requested its shares temporarily halt trading until it announces the outcome of the institutional component of the share sale. The company also announced full-year net income of $1 billion, in line with analyst estimates.
For Exxon, Scarborough’s once-promising 7.3 trillion cubic feet of gas fell out of favor with the energy giant as more profitable, less risky LNG opportunities arose in places like Papua New Guinea and Mozambique. Still, the company remains wedded to the floating-production model: ships built to process and export crude are linchpins of Exxon’s plans to harvest massive offshore crude discoveries in Guyana.
Woodside will also use funds from the share offer to develop its SNE oil project in Senegal and bring its Browse project to a final investment decision by 2021, a year later than previously planned. Up to 10 million tons of LNG could be developed from Browse at the North West Shelf complex at an overall project cost of $20.5 billion with Woodside funding up to $6.3 billion of the planned capital expenditure.