Oil Search offer shares

OIL Search has announced an equity raising offer of US$700 million (K2.35bil) which is open to eligible PNG shareholders.
The company, in a statement, said proceeds of the equity raising would be used to strengthen Oil Search’s balance sheet and increase liquidity, so it could withstand period of low oil prices.
The equity raising would be conducted at an offer price of A$2.10 (K4.27) per share which represented a 23.1 per cent discount to Oil Search’s last closing price.
Oil Search said it was well-positioned to deliver its world-class growth projects in PNG and Alaska when market conditions improved.

Managing director Keiran Wulff said: “In response to the recent rapid decline in oil prices, Oil Search has undertaken a number of decisive actions to preserve capital and strengthen the balance sheet, while also maintaining safe and reliable operations.
“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.
“Oil Search believes it is well positioned to deliver on its world-class growth projects in PNG and Alaska when market conditions improve.
“The additional time will allow us to finalise the P’nyang gas agreement with the PNG Government and optimise the Alaskan development.”
Meanwhile, in response to market conditions, Oil Search has suspended or deferred discretionary activities within its control, resulting in around 40 per cent reduction in this year’s forecast investment expenditure guidance.
It is also executing preliminary cost reduction measures (including salary cuts, headcount reductions in Sydney and Anchorage and discretionary spending cuts) and the commencement of a systematic review of operating costs to be implemented by June 2020.
It is also implementing business continuity plans and amending work practices in response to Covid-19, to reduce risk to employees, contractors and communities.

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