Woodside Petroleum Ltd (ASX: WPL)

Equity Raising for Strategic Benefits: Woodside Petroleum has come into spotlight with the news on equity raising of about $2.5 billion to cater to many strategic objectives that the group is targeting to achieve for its future performance. An Entitlement Offer is being eyed and this will take the form of a fully underwritten pro-rata accelerated renounceable entitlement offer with retail rights trading under which shareholders will be entitled to acquire one new share for every 9 shares held on the record date (19 February 2018), at a discounted price of A$27.00 per New Share.

Particularly, the proceeds have been indicated to help fund the acquisition of 50% ExxonMobil’s stake in the large undeveloped Scarborough gas field off the coast of Western Australia and for LNG expansion in Western Australia and an oil project in Senegal. WPL also intends to use a portion of its proceeds for Browse LNG project’s progress to a final investment decision. With the stake to be purchased in Scarborough, Woodside’s interest in the field will enhance to 75% with remaining interests held by BHP Billiton. The reason for this move seems to be in relation to piping gas to the Burrup Peninsula for processing in North West Shelf processing plants or at Pluto plant. Overall, the acquisition is in line with delivering value creating opportunities while taking early mover advantage, development alignment, and maintaining a decent financial position by reducing gearing from higher to lower end of target range. The group is also set to take the advantage of the growing LNG demand.
 

Delivering Value (Source: Company Reports)
 
Meanwhile, Woodside Petroleum has posted an 18% year-on-year rise in full year net profit to $US1.024 billion, which has been as per the market’s expectations; and has declared to pay a final dividend of US 49 cents per share bringing the full year dividend to US 98 cps. The result got support from higher product prices and sustained low production costs. While maintaining investments in growth project, WPL also generated free cash flow of $832 million. The stock is good to hold given the developments planned by the group.
 

Business Strategy (Source: Company Reports)
 
 

Fletcher Building Limited (ASX: FBU)

More challenges laid out: With the news that Ralph Norris (former chief executive of Commonwealth Bank in Australia) is stepping down as the chairman of Fletcher Building, the embattled company was seen to come under further pressure. The group had reported losses in its building and interiors division to be further aggravated by an amount of NZ$486 million ($450 million) and that the group will not be paying any interim dividend for HY18. The additional losses have blown the total losses from the building and interiors division to NZ$660 million. FBU stock plunged 7% on February 14, 2018 and it would be better to avoid this at the current price.

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