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.
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.
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$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%.
