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AAP: Woodside posts record annual production

January 18, 2007 – 10:14AM

Woodside Petroleum has delivered record annual production and revenue on the back of higher commodity prices, but, as expected, output issues at its Chinguetti oil field have started to bite.

Woodside, Australia’s biggest independent oil and gas producer, posted production of 19 million barrels of oil equivalent (Mmboe) for the fourth quarter.

The result was just short of the 19.1 Mmboe produced in the third quarter and a 28.1 per cent increase on the 14.8 Mmboe produced in the corresponding quarter in 2005.

The result took annual production to a record 67.9 Mmboe, up 13.8 per cent on the 2005 level primarily due to it achieving first production from its Chinguetti and Enfield oil projects.

The production result was in line with the group’s downgraded forecast of 67 to 68 Mmboe.

The November revision, from the previous forecast of 72 Mmboe, was the second downgrade of last year after Woodside revised its initial target of 76 Mmboe in June.

Revenue for the fourth quarter took a hit from lower commodity prices and was 4.1 per cent lower than the previous quarter at $1.09 billion.

The result was 44.7 per cent higher than the $758.9 million recorded in the fourth quarter of 2005.

Woodside’s increased production and favourable commodity prices over the course of the year helped boost annual revenue to a record $3.81 billion.

But production issues at the $1 billion Chinguetti oil field in Mauritania have started to bite at the bottom line, with output in the fourth quarter down by a third (31 per cent) compared to the previous quarter.

In a November briefing, Woodside decreased the Mauritania reserves by 57 per cent and informed the market that the oil fields were only delivering half the expected production.
“Woodside continues to examine options to maximise the value of its Mauritanian holdings,” the company said.

Planned and unplanned maintenance shutdowns coupled with a cyclone also had an impact on production at the Cossack Pioneer and Mutineer-Exeter operations off the coast of Western Australia.

Production from the Enfield oil field off the coast of WA was marginally lower with one of the wells still closed after it had cut water unexpectedly in September.

Woodside said its emerging Pluto liquified natural gas (LNG) project, also off the coast of WA, was on track to deliver first LNG to Japanese customers by the end of 2010.

The project is expected to cost in the order of $6-$10 billion to bring online.

UBS energy analyst Max Brewster said the fourth quarter was broadly in line with expectations and the company’s previous forecasts. “Enfield looked alright to us, in terms of their production there wasn’t really much difference in what we were expecting,” he said. “They did indicate a while back that the production rates that had been earlier forecast weren’t being realised. “As for Chinguetti, it was probably a little bit less than what we were expecting.”

Overall, Mr Brewster said Woodside posted a reasonably strong production quarter.
“I thought it looked pretty solid and it looks as though they have done well with their LNG output,” he said.”I think t heir production is pretty much in line with their recent guidance and it is a pretty solid result.”

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