(The following was released by the rating agency)
MELBOURNE (Standard & Poor's) May 1, 2012--Standard & Poor's
Ratings Services said today that Woodside Petroleum Ltd.'s
(BBB+/Negative) announcement that it proposes to sell its
minority equity share in the Browse liquefied natural gas (LNG)
development has no immediate rating impact. The sale is subject
to joint-venture pre-emption rights, and expected proceeds are
US$2 billion. If successful, it would reduce Woodside's share in
Browse to about 31.3% from 46%.
In our opinion, the sale to an offtaker will not only
alleviate Woodside's own funding burden for Browse, but will
also provide buyers with some project insight and align
shareholder interests at all levels of the Browse LNG project.
In addition, this initiative indicates Woodside is likely to
adopt a more conservative funding approach if it were to proceed
with the Browse project, compared with the Pluto foundation
development, in which Woodside's equity share is 90%.
Nonetheless, we recognize that Browse would have a larger scale
and higher total capital expenditure than the Pluto foundation
The company recently announced the first production of LNG
from the latter project. We will continue to monitor the
commissioning progress of the Pluto project, and will reassess
the rating outlook within a 12-month period. The outlook could
return to stable if:
-- Pluto demonstrates an operational track record. This
would include Woodside returning to positive free operating cash
flow generation once Pluto is commissioned, and maintaining
funds from operations (FFO) to debt (adjusted to include
asset-retirement obligations and operating leases) at more than
-- Woodside adopts a disciplined funding approach for its
next large-scale capital project.