Sydney Morning Herald: Higher prices provide a handy cushion for Woodside

Angela Macdonald-Smith
January 18, 2008

WOODSIDE Petroleum, the country’s second-largest oil and gas producer, said fourth-quarter sales rose 7 per cent as prices climbed and the Stybarrow field started producing crude.

Sales rose to $1.17 billion in the quarter to December 31, from $1.1 billion a year earlier, the group said yesterday. Overall production fell 5 per cent to 18 million barrels of oil and gas.

Woodside’s full-year sales grew 5 per cent to $4 billion, as output climbed 4 per cent.

In November Woodside, 34 per cent owned by Royal Dutch Shell, cut its output forecast for 2008 by as much as 20 per cent because of slower start-ups of new projects and the sale of fields in Mauritania. Output last year was 70.6 million barrels, in line with a reduced forecast given in October.

“The fourth quarter was very much in line with our expectations overall, on production, revenue and sales volumes,” said Mark Greenwood, an energy analyst at JPMorgan Chase.

The group reported a $230 million loss on the sale of its Mauritanian assets, which was more than expected and would reduce earnings, he said, while exploration expenses were higher than expected. Woodside shares fell as much as 79c, or 1.6 per cent, to $48.52 on the news, compared with a drop of 1 per cent in the exchange’s benchmark energy index.

The gain in sales “was achieved through increased production of higher-value products and stronger commodity prices, which outweighed an overall decrease in production due to natural field decline and ongoing repairs” at Corallina and Mutineer-Exeter fields off north-western Australia, Woodside said in the statement.

The company maintained its 2008 output forecast at between 80 million and 86 million barrels of oil equivalent. Production would be increased by a full-year of output from the Stybarrow field off north-western Australia, the ramp-up of the Otway gas project off the south-eastern coast and the start-up of the Neptune, Vincent and Angel projects as well as the expansion of the North West Shelf venture’s liquefied natural gas production, Woodside said.

The start-up in November of the half-owned Stybarrow field, operated by BHP Billiton, increased fourth-quarter revenue by about $75 million, helping compensate for a decline in output from the Laminaria-Corallina field due to the shutdown of part of the venture because of a gas leak.

Total output still fell, because of the sale of the Legendre field in Australia and the Chinguetti field in Mauritania, and lower output from the Mutineer-Exeter field in Australia and from gas and condensates fields in the Gulf of Mexico.

The price of Tapis crude oil, an Asian benchmark, averaged $US94.74 in the quarter, up from $US62.59 a year earlier, according to data compiled by Bloomberg. The Australian dollar was 15 per cent higher in the quarter, reducing the effect of the price rise.

Bloomberg

http://business.smh.com.au/higher-prices-provide-a-handy-cushion-for-woodside/20080117-1mlw.html

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