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Bloomberg: Woodside Cuts Forecast on Asset Sales, Field Decline (Update3)

By Gavin Evans

 Oct. 18 (Bloomberg) — Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, cut its full-year output forecast as much as 10 percent, citing asset sales and reduced production at some fields.

Production may be between the equivalent of 70 million to 71 million barrels of oil this year, Woodside said in a statement to the Australian Stock Exchange today. The Perth- based company forecast output of 72 million to 78 million barrels in August.

Woodside, 34 percent owned by Royal Dutch Shell Plc, has failed to meet output targets set two years ago as projects in Australia, Africa and the U.S. were delayed or produced less than forecast. The company, which had projected 2007 output to reach 90 million barrels, last month agreed to sell interests in Mauritania to invest in better-performing fields.

“The assets sales were all in the market,” said Mark Greenwood, who follows the stock at JPMorgan Chase & Co. in Sydney. The latest forecast “is a 2 percent downgrade compared with what we were going for, but it was on generally lower production over a range of their operations. There’s nothing there to be too concerned about.”

Production in the three months ended Sept. 30 totaled 17.6 million barrels, down 8 percent from a year earlier, after the March sale of the company’s stake in the Legendre field and a 69 percent decline in output at Mauritania’s Chinguetti project.

Cossack Maintenance

A 12-day maintenance shutdown in September contributed to a 24 percent decline in output at the Cossack oil project, while there were also natural declines in production at the Laminaria- Corallina and Mutineer-Exeter fields, Woodside said. The three fields are located off Australia’s northern and western coasts.

Woodside rose A$1.32, or 2.4 percent, to A$55.50 in Sydney trading, having declined as much as 3 percent to A$52.58 immediately after the announcement.

The stock reached a record $56.66 yesterday and some investors are probably selling out, concerned that high oil prices may not last, JPMorgan’s Greenwood said.

New York oil futures reached a record $89 a barrel yesterday and averaged $75.15 a barrel during the third quarter, 6.4 percent more than a year earlier.

Still, the Australian dollar averaged 84.69 U.S. cents during the period, 12 percent more than a year earlier, and contributed to a 16 percent decline in Woodside’s sales revenue for the period to A$964 million ($858 million).


Woodside last month agreed to sell its interests in Mauritania to Petroliam Nasional Bhd. for $418 million as part of a review of its African business. Chinguetti produced 468,208 barrels of oil in the period, from 1.14 million a year earlier.

The sale, expected to be completed Nov. 1, will reduce full-year output. Production from Corallina in the Timor Sea, shut since Sept. 30, may also not resume for three to six months depending on the availability of a repair vessel, Woodside said.

Output from the Otway gas project, started off Australia’s southeast coast last month, has been slowed by “start-up issues” and probably won’t stabilize until January. Production at the Neptune project in the Gulf of Mexico may not start until early 2008, Woodside said.

Neptune, with a daily capacity of 50,000 barrels of oil and 50 million cubic feet of gas, will be producing by the end of the year, operator BHP Billiton said Aug. 23. Woodside owns 20 percent of the project.

Commissioning is under way and Woodside’s forecast simply reflects a conservative view of likely production start-up, spokesman Roger Martin said.

To contact the reporter on this story: Gavin Evans in Wellington at [email protected]

Last Updated: October 18, 2007 02:34 EDT and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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