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THE WALL STREET JOURNAL: Woodside's earnings drop 3.4%

February 16, 2006
PERTH, Australia — Woodside Petroleum Ltd. said its 2005 net profit fell 3.4%, but revenue rose 29%, driven by high oil and gas prices.
While the profit result met expectations, the operator of the multibillion-dollar North West Shelf gas project disappointed investors as it cut its 2006 production forecast by 2% to 76 million barrels of oil equivalent. Nevertheless, Australia's biggest energy group remains on target to double production by 2011, said managing director Don Voelte.
Woodside, which is 34% owned by Royal Dutch Shell PLC, said profit fell to 1.11 billion Australian dollars (US$823.6 million) from A$1.15 billion in 2004. Removing the impact of asset sales and other items, earnings would have risen 55%, helped by the jump in revenue to a record A$2.75 billion, from higher product prices and volumes. The 2004 results included gains from the sale of a 40% stake in the Enfield oil field and related permits.
Woodside shares fell 2.6% to A$40.21 ($29.84) in closing Sydney trading yesterday.
The company had a “pretty tough January,” Mr. Voelte said, referring to weather-related difficulties at several fields that cut production by one million barrels.
Output this year will rise 27% as new fields come on stream, including the US$705 million Chinguetti venture off the Mauritania shore that is expected to produce its first oil in a few days. The revised output forecast was below earlier expectations of a 30% jump.
Production rose about 4% to 59.7 million barrels of oil equivalent in 2005.
John Hirjee, an analyst at Deutsche Bank, noted that Woodside's forecast may prove conservative because of the potential for its A$1.48 billion Enfield oil project to come on stream in the third quarter, months ahead of schedule. “Woodside's long-term potential and very significant production growth over the next two to three years is still intact,” Mr. Hirjee said.
Mr. Voelte, a former Mobil executive who joined Woodside in April 2004, expects oil prices to remain firm over the next 12 months, while liquid-natural-gas markets are “as strong as we've seen them in a long time.” He said a “stream of buyers” continues to knock on Woodside's door, including China, which is scheduled to receive its first LNG exports from the North West Shelf in June.
Write to Stephen Bell at [email protected]

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