Oil Search advisers say demand for its $1.1bn-plus equity raising has been significantly in excess of the offer size.
In a final book message sent to investors, the advisers said that long term shareholders had been prioritised in allocations for shortfall stock.
“The book for the Oil Search accelerated institutional entitlement offer and placement has closed with bids significantly in excess of the offer size.”
The retail component of the entitlement offer has also been underwritten.
The oil and gas producer will resume trading on Wednesday.
Oil Search has launched its equity raising, securing $1.16bn.
The company announced on Tuesday it would raise $760m through a fully underwritten institutional placement and about $400m through a partially underwritten one for 8 accelerated pro-rata non-renounceable entitlement offer.
Shares were sold at $2.10 each, which was a 23.1 per cent discount to the last closing price of $2.73.
The proceeds were to strengthen the balance sheet at a time of material decline in the oil price and as it has a looming refinancing debt deadline in September.
Working on the raise is Goldman Sachs and Macquarie Capital.
“In our view, the raise today gives the company time to pursue options but it is not clear there is adequate capital on its balance sheet to fund its growth plans,” said Morgan Stanley analysts in a research note.
Morgan Stanley said Oil Search may look at raising additional capital over time to continue with its growth plans or to lower its investment commitments through farm-downs to its PNG LNG project or Alaska project if the oil price does not increase above Morgan Stanley’s long-term oil price forecast of US$45 per barrel.
They assume the Oil Search Alaska project could face a one-year delay.
“We think Oil Search could do well if oil prices recover quickly but we view Santos as a lower risk opportunity, and hence our recent upgrade to overweight.”
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