Woodside shares splutter on $3 billion cash refill

ASX 200 investors are bidding down Woodside shares amid a $3 billion funding announcement.

| More on:
Worker inspecting oil and gas pipeline.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Woodside Energy Group Ltd (ASX: WDS) shares are sinking today.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $25.00. In morning trade on Friday, shares are changing hands for $24.66 apiece, down 1.4%.

For some context, the ASX 200 is up 0.3% at this same time.

Created with Highcharts 11.4.3Woodside Energy Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

This comes as the Brent crude oil price edged 0.1% lower overnight to US$72.69 per barrel.

And it comes as investors digest Woodside's US$2 billion (AU$2.97 billion) bond announcement.

$3 billion of new funding secured

Woodside shares are sinking following an ASX release this morning revealing that the company has successfully priced US$2 billion of senior unsecured bonds in the United States market.

The bond offering consists of US$1.25 billion of 10-year bonds with a coupon of 5.1% and US$750 million of 30-year bonds with a coupon of 5.7%.

Management expects settlement of the bonds to occur next week, on 12 September, subject to customary closing conditions.

As for what the ASX 200 energy company intends to do with the almost AU$3 billion in new funds, it only stated, "The funds will be used for general corporate purposes."

However, Standard & Poor's believes Woodside will use the funds to help fund its US$2.35 billion acquisition of OCI's Clean Ammonia Project, located in Beaumont, Texas, and its US$900 million acquisition of the 27.6 million tonnes per annum Driftwood LNG terminal in Louisiana, secured via its Tellurian takeover.

Commenting on Woodside's Clean Ammonia project in August, CEO Meg O'Neill said, "This acquisition positions Woodside to be an early mover in the lower carbon ammonia industry and meet growing customer demand globally."

O'Neill added, "It supports our strategy to thrive through the energy transition with a low-cost, lower-carbon, profitable, resilient, and diversified portfolio."

Remarking on how the US$2 billion in new bonds may impact Woodside shares, S&P said (quoted by The Australian Financial Review):

We believe these acquisitions will diminish Woodside's financial capacity. However, the company can absorb the immediate impact of an additional US$3.25 billion in acquisitions over the next 12 months.

Woodside's ability to balance growth projects with financial policy objectives will be fundamental to rating stability over the next few years.

Moody's also sounded off on Woodside's US$2 billion in bonds.

Moody's cautioned, "The organic and inorganic growth initiatives will keep execution risk and capital spending elevated." However, Moody's does not believe this will materially weaken Woodside's credit quality.

How have Woodside shares been tracking?

Amid slumping global oil prices and billions of dollars in capex spending on acquisitions and new project developments, Woodside shares have come under heavy selling pressure over the past year and are now down 36%.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

Guess which ASX 300 stock just rocketed 43% on big news!

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Energy Shares

4 reasons to buy Santos shares right now

A leading expert forecasts Santos shares and dividends are set to grow. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX 200 stock has rocketed 86% since April?

This sky rocketing ASX 200 stock continues to defy short sellers. But how?

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

4 ASX 200 energy shares making big moves today as OPEC's oil production set to surge

ASX energy shares, including Woodside and Santos, are making big moves today. But not all in the same direction.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Woodside share price charging higher on North West Shelf approval

Woodside has been working more than six years to gain an extension for its North West Shelf gas project.

Read more »

Gas and oil plant with a inspector in the background.
Energy Shares

Does Macquarie rate Origin Energy shares a buy, hold or sell?

The broker has given its verdict on the energy giant. Let's see what it is saying.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Ord Minnett tips Woodside shares to rise 15%+

Market-beating returns could be on offer from this energy giant.

Read more »