UPDATE: Oil Search: Capital Raising Possible But Last Resort
May 06 2009 - 2:10AM
Dow Jones News
Oil Search Ltd. (OSH.AU) said Wednesday it has a number of
levers it can pull to manage its capital, including a capital
raising, assets sales or hedging.
Oil Search, however, said it will only conduct a capital raising
as a last resort.
The Port Moresby-based company needs to conserve capital to help
fund its current 34% share of the US$11 billion Exxon Mobil-led PNG
LNG liquefied natural gas project in Papua New Guinea.
JPMorgan analysts said yesterday they expect Oil Search to sell
down a 3% holding in the project, which they estimated could help
it raise around US$500 million.
Oil Search has already announced big cuts in exploration and
development spending and introduced an underwritten dividend
reinvestment plan to bolster its balance sheet.
In a slideshow presentation at the Macquarie Australia
Conference in Sydney, Oil Search said there are "many other levers,
including hedging, asset sales, capital raising" that it can
pull.
PNG LNG is considered by analysts as one of the two most likely
LNG plants to get built in the Asia Pacific region alongside the
Chevron-led Gorgon LNG project in Western Australia state.
Oil Search said that it still expects front-end engineering and
design for PNG LNG to be completed by the end of the 2009 third
quarter.
Export credit agencies, or ECAs, expected to provide cornerstone
financing, continue to provide positive feedback, Oil Search
said.
Preliminary commitments and final terms from ECAs are expected
late in the third quarter, Oil Search said, adding that it's also
receiving continued strong interest from banks.
Oil Search stuck to its 2009 annual production target of 8.0
million-8.3 million barrels of oil equivalent.
By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957;
ross.kelly@dowjones.com
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