Woodside Petroleum will raise $2.5 billion in an entitlement offer to fund ambitious plans to expand its presence in the booming global market for liquefied natural gas (LNG).
Woodside it seeking to transform itself into a major LNG player and is building the Pluto project off western Australia as well as LNG projects in the Browse Basin and Timor Sea.
Fund managers said the new funds, announced on Monday, should help address concerns raised by credit-ratings agencies last month over the additional capital costs of the Pluto project.
"This will give them a fair leeway in terms of building up their equity position and their ability to service debt," said Pengana Capital portfolio manager Tim Schroeders, who does not hold Woodside stock.
"They may need more capital down the track, but we're talking some two-plus years out."
Standard & Poor's and Moody's Investors Service put Woodside on negative ratings watch last month, saying a major debt increase to fund Pluto had already put pressure on Woodside's ratings.
Woodside said last month that the cost of the Pluto project, currently at around $10 billion, could rise by up to 10 percent because of slower construction work.
Woodside will offer one new share for every 12 held at $42.10 a share, a 10.8 per cent discount to its Friday close of $47.18.
Woodside's largest shareholder, Royal Dutch Shell, will take up its full entitlement worth about $862 million.
Pengana's Schroeders said institutional shareholders would likely support the raising, which was at a reasonable discount.
"The shareholder base overall is a very loyal one and it's a vote of confidence that Shell has shown a willingness to take up their proportion of their issue," he said.
Woodside has said it would consider boosting its stake in the joint venture Browse project if it could not agree on a development plan with its partners.
Joint lead managers and underwriters to the rights offer are Citigroup, Credit Suisse and UBS. Credit Suisse acted as financial adviser to Woodside.