Oil and gas producer Santos has launched a $3 billion capital raising to fund its growth projects, including the PNG liquefied natural gas project, which is estimated to have a capital cost of $US12.5 billion ($A16.3 billion).
The Adelaide-based company said the entitlement offer will be split into two parts, with the $1.65 billion institutional component fully underwritten.
The retail component could add a further $1.35 billion to Santos' capital raising efforts, with this component not underwritten.
Under the offer, Santos will issue two shares for every five held at a discounted price of $12.50 each.
Shares in the company last traded at $17.09.
Just over $1 billion of funds raised will be used to support Santos' share of the spending required for the Papua New Guinea LNG operation, which is a joint venture with ExxonMobil and other partners.
In a statement today, Santos said based on ExxonMobil's pre front end engineering and design estimates, the capital cost of the project is around $US12.5 billion ($A16.3 billion), with first LNG exports expected late 2013 or 2014.
Meanwhile a further $600 million raised from the offer will be used to redeem certain hybrid securities.
Any extra capital raised will be used to fund other projects, including its proposed LNG project in Queensland that is expected to get final investment approval in the first half of 2010.
Santos also reiterated its guidance for calendar 2009 to maintain its full year dividend at 42 cents per share, in line with 2008.
"The underwritten proceeds of this raising provide Santos with the capital required to fund its equity share of the PNG LNG project and guarantee its share of the project finance debt, while maintaining a strong balance sheet," chief executive David Knox said.
"PNG LNG project is expected to create significant value for Santos and, along with Gladstone LNG, is a critical part of our growth strategy.
"The PNG LNG project is expected to materially enhance Santos earnings once it is completed, and we are raising equity today to fully participate in the project while maintaining our strong financial position."
Meantime, the oil and gas company said it was in early stages of "participating in a bid process to acquire an operating asset in a region where Santos already has production operations which Santos currently believes has an indicative value in the torder of $US200 million".
Santos also affirmed its guidance to produce between 53 and 56 million barrels of oil equivalent (mmboe) this year.
