ASX-listed energy producer Oil Search is tapping investors for $US1.16 billion ($A1.90 billion) in order to withstand a prolonged period of low oil prices.
The Papua New Guinea and Alaska-focused firm says its $US700 million raising will be conducted at $2.10 per share, which represents a 23.1 per cent discount to its last closing price.
Managing director Keiran Wulff says his company is responding decisively to strengthen its balance sheet during a time of low oil prices and great uncertainty for the industry.
“Our capital preservation measures, together with the equity raising are intended to ensure that Oil Search can withstand a prolonged period of lower oil prices,” Mr Wulff said on Tuesday.
“Oil Search believes it is well positioned to deliver on its world-class growth projects in Papua New Guinea and Alaska when market conditions improve.”
The company joins the likes of Cochlear, Reece, Webjet, Flight Centre, and oOh!media in tapping investors for cash during the coronavirus pandemic.
Adding to the COVID-19 uncertainty is that Oil Search and its energy sector competitors have been battered by a global oil price slump amid a supply standoff between Saudi Arabia and Russia.
The company entered a trading halt on Monday before the expected raising announcement.
Oil Search last month announced plans to reduce its investment spend by 40 per cent to between $US440 and $US530 million for FY20, while it has cut salaries and stuff numbers, and extended the maturity on a $300 million loan facility by 10 months to June 2021.
Oil Search’s 2020 production guidance of 27.5 to 29.5 mmboe remains unchanged, assuming no business interruption from COVID-19.