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Woodside profit slumps on oil project delay, lower sales

BY JAMES PATON

PERTH, Australia (Bloomberg) -- Woodside Petroleum Ltd., Australia’s second-largest oil and natural gas producer, reported full-year profit fell 17 percent after a delay in restarting an oil project and a drop in sales.

Underlying profit was $1.7 billion, down from $2.06 billion a year ago, Perth-based Woodside said today in a statement. Underlying profit, adjusted for writedowns, was $1.92 billion, the company said. The median estimate of eight analysts surveyed by Bloomberg was $1.89 billion.

Woodside is pushing ahead with overseas expansion after delays at its proposed Browse and Sunrise liquefied natural gas ventures in Australia. Talks with customers of the A$15 billion ($13.5 billion) Pluto LNG venture resulted in higher prices for as much as 75 percent of sales, it said today.

“The major contract for us this past year has been negotiations on Pluto, and those negotiations have been completed,” CEO Peter Coleman told reporters today on a call. The project shipped its 100th cargo in January, according to a presentation.

Woodside fell 0.3 percent to A$38.37 in Sydney trading, while the benchmark index gained 0.3 percent.

The new prices are expected to apply to about 25 percent of Pluto sales in the first quarter of 2014 and 35 percent in the second quarter, the company said today in a separate presentation. Those prices will apply to about three quarters of sales starting in the third quarter, Woodside said.

The company will pay a final dividend of $1.03 a share, up 58 percent on last year.

Net income dropped 41 percent to $1.75 billion, Woodside said. That compared with the $1.77 billion median estimate of seven analysts surveyed by Bloomberg. The company said in January it expected writedowns of as much as $400 million for some of its oil and gas assets.

Woodside, which signed an initial agreement earlier this month to buy a quarter of Israel’s biggest natural gas field for as much as $2.6 billion, said today it will pursue growth while returning cash to holders. Net debt fell 20 percent to $1.5 billion, while cash and undrawn facilities to fund growth stood at $3.8 billion.

The results today “underscore the cash-generating capacity of the assets,” John Hirjee, a Melbourne-based analyst at Deutsche Bank AG, said today by phone. “The balance sheet is very strong, and the ability to invest is there.”

Woodside expects an investment decision later this year for a domestic gas supply project in Israel, Coleman said today. The Leviathan venture also is targeting supply of gas by pipeline to neighboring countries and LNG exports.

A decision on Woodside’s Browse floating LNG venture in Australia is expected in the second half of 2015, it said.

Woodside last year faced a delay in restarting the Vincent floating production storage and offloading vessel. Vincent resumed in November, the company said last month.

02/19/2014

 

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