Analysis of Woodside Petroleum Ltd's Financial Strategies

Woodside Petroleum Ltd is recognized for its international oil and gas operations. This analysis focuses on their use of short-term and long-term debt financing. Short-term debt includes instruments like commercial paper, used for immediate financial needs. Long-term debt involves bonds maturing over more than a year, evident in Woodside's issuance of US$200 million medium term notes. The company maintains a strong credit rating by managing its debt obligations effectively, securing funding competitively, and ensuring liquidity with an interest coverage ratio within target ranges. These strategies help Woodside maintain financial stability even during challenging commodity cycles.

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Finance
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Table of Contents
Answer to question A:................................................................................................................2
Answer to question C:................................................................................................................3
Short term debt financing:..........................................................................................................3
Long term debt financing:..........................................................................................................3
Answer to question D (ii):..........................................................................................................3
Reference List:...........................................................................................................................5

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Answer to question A:
Woodside Petroleum Ltd is considered as one of the Australia’s largest independent
company of oil and gas having an international portfolio. The company is recognized for its
world-class abilities of being the explorer, developer, producer and supplier of the energy
(Woodside.com.au 2018). The company has exploration, development and operating
activities in Australia with a large number of international regions along with the regions of
Canada, U.S, Korea and Ireland. Within the geographical boundaries of Australia Woodside
Petroleum Ltd operates and develops several number of liquefied petroleum gases projects.
The operations of Woodside Petroleum Ltd extend to Enfield and Vincent oil fields
offshore from the regions of Exmouth in Western Australia. The objective of the firm is to
render superior return to the shareholder by realising its vision of becoming an international
leader in the upstream oil and gas. The assets of the Woodside Petroleum Ltd are renewed for
the purpose of safety, reliability and efficiency since the company is the most experienced
operator of the liquefied natural gas. Woodside Petroleum Ltd additionally operates a fleet of
floating manufacturing storage and facilities of offloading.
Woodside Petroleum Ltd continuous to enlarge their abilities in marketing, trading
and shipping and possess a lasting relationship that ranges from more than 25 years of
foundations customers across the Asia-pacific regions (Woodside.com.au 2018). The
Woodside Petroleum Ltd is also looking forward to pursue the opportunities of delivering the
affordable energy to the internationally growing markets. The international exploration
portfolio comprises of the emerging and frontier provinces of Australia and Asia-Pacific
regions. The company believes that the technology and innovation is essential in reducing the
costs and unlocking the future growth. Currently, Woodside Petroleum Ltd is pioneering its

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support towards the implementation of the artificial intelligence and improved analytics
throughout its business operations.
Answer to question C:
Short term debt financing:
One example of short term debt financing is commercial paper. Commercial paper is
regarded as the unsecured, short term instrument of debt that is issued by the companies
particularly for financing the accounts receivable and meeting the short term debt obligations
of inventories and short term liabilities (Kahl, Shivdasani and Wang 2015). The maturities of
the commercial paper hardly range any further than 270 days. Commercial paper is generally
issued at the discount from the face value and illustrates the current interest rate of the market
(Florou and Kosi 2015).
Long term debt financing:
Long term debt comprises of the long term bonds that have the financial obligations
of more than one year. The long term debt of an organization mainly comprises of the
financial or bond obligations that becomes due following a period of 12 months (Angelini et
al. 2015). The long term company bonds that is capitalized on the balance sheet of the firm
categorized as the long term liabilities or fixed liabilities.
On considering the balance sheet of the Woodside Petroleum Ltd it is understood that
the company has issued a long term debt for the purpose of financing (Badoer and James
2016). The company floated US$ 200 million medium term notes based on the LIBOR rate of
three months. Additionally, US$175 million of medium term notes were issued having a
fixed coupon rate of 1.00% yearly that matures on 11 December 2023 (Woodside.com.au
2018).

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Answer to question D (ii):
On considering the initial credit rating of $1.0 billion of Woodside Petroleum Ltd is
that the company manages the credit risk on the trade receivables and financial instruments
by mainly dealing with the counterparties based on the investment grade credit rating (Fong
et al. 2014). As the part of the administering the debt obligations the company it has secured
1.4 billion in the form of funding at the competitive rates. The liquidity of company is $2.7
billion and the interest coverage ratio of the organization continuous to remain inside the
target range of 25%. The average tenure of maturity of the company debt portfolio is 4.6
years.
Most importantly the balance sheet of the organization continuous to remain strong.
However, the major capital, exploration and acquisition expenses during the year 2015 the
interest coverage increased marginally from 23.3 percent to 24% and as a result of this the
company has been successful in maintaining the investment grade credit rating
(Woodside.com.au 2018). Based on the credit rating of $1.0 billion the company has been
successful in maintaining the gearing with the targeted range of 24%. The company
continuous to remain one of the few organizations that has successfully been able to maintain
the credit rating with the help of low point under the commodity cycle.

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Reference List:
Angelini, P., Clerc, L., Cúrdia, V., Gambacorta, L., Gerali, A., Locarno, A., Motto, R.,
Roeger, W., Van den Heuvel, S. and Vlček, J., 2015. Basel III: Long‐term Impact on
Economic Performance and Fluctuations. The Manchester School, 83(2), pp.217-251.
Badoer, D.C. and James, C.M., 2016. The Determinants of Long‐Term Corporate Debt
Issuances. The Journal of Finance, 71(1), pp.457-492.
Florou, A. and Kosi, U., 2015. Does mandatory IFRS adoption facilitate debt
financing?. Review of Accounting Studies, 20(4), pp.1407-1456.
Fong, K.Y., Hong, H.G., Kacperczyk, M.T. and Kubik, J.D., 2014. Do security analysts
discipline credit rating agencies?.
Kahl, M., Shivdasani, A. and Wang, Y., 2015. Short‐Term Debt as Bridge Financing:
Evidence from the Commercial Paper Market. The Journal of Finance, 70(1), pp.211-255.
Woodside.com.au. (2018). Woodside Energy | Investors and Media. [online] Available at:
http://www.woodside.com.au/Investors-Media/Pages/default.aspx [Accessed 20 Jan. 2018].