Woodside Says Able to Raise All Funds It Needs From Debt Market

By Angela Macdonald-Smith and Heidi Couch

Feb. 20 (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, expects to be able to raise all the funds it needs this year of as much as $1.7 billion from the debt markets, without relying on asset sales.

Any proceeds from the divestment of ventures will reduce the amount required to be raised in debt, Mark Chatterji, chief financial officer of Perth-based Woodside, said today in an interview. Any asset sales will be outside the company’s liquefied natural gas-focused areas of Western Australia and the Timor Sea, the company said this week.

Woodside, 34 percent owned by Royal Dutch Shell Plc, said Feb. 18 it may sell some assets, is deferring or cutting A$500 million ($323 million) of spending and will take on more debt to fund its expansion in LNG. Capital investment is set to jump this year, mostly because of construction of the A$12 billion Pluto LNG project in Western Australia.

“The debt markets have been challenging for everybody,” Chatterji said. “We expect our external funding requirement for the year to be in the range of $1 to $1.7 billion, but we expect that we can source all of those fundings from the debt markets. Obviously if you realize investor proceeds, the amount of debt we would need would go down.”

Woodside rose as much as A$1.03, or 3.1 percent, to A$34.55 in Sydney trading and was at A$34.20 at 10:59 a.m. local time. The gain outpaced an advance of as much as 1.1 percent in the Australian stock exchange’s benchmark energy index.

The company signed loan agreements of $1.5 billion last year and agreed additional debt of $800 million in January. Crude oil prices have slumped about 74 percent since a record $147.27 a barrel in July. Woodside said this week it expects to need between $1 billion and $1.7 billion in additional external funding this year to help fund Pluto.

U.S. Bonds

“We believe this amount of debt should be able to be raised, most likely through the U.S. bond market” JPMorgan Chase & Co. said in a Feb. 18 report. “We believe that Woodside will pull every lever at its disposal before it taps the equity market.”

The Pluto project, which will more than double Woodside’s LNG output once it starts up at the end of 2010, should be between 85 percent and 90 percent complete by the end of the year, Chatterji said.

Woodside may sell its Otway natural gas project off southeast Australia, which may raise as much as A$800 million, Macquarie Group Ltd. said in a Feb. 19 report.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net